The panel has suggested that a new legal framework within the Reserve Bank of India (RBI) guidelines should be brought in to ban cryptocurrencies and the law should clearly specify that any kind of dealing in such currencies should be treated as illegal, said the sources.
In November, the government had appointed a panel to draft the norms for virtual currencies.
The panel has suggested that “a new sovereign backed virtual or cryptocurrency may be proposed considering global circumstances; probably at a later stage.”
In February 2018, finance minister Arun Jaitley in his Budget speech had said that the government does not consider cryptocurrencies as legal tender, giving a clear message on the warnings issued by RBI and the finance ministry. He also said that the government will take measures to eliminate the use of such currencies in financing illegitimate activities or as part of the payment system.
This means that India-based crypto companies might have to cease operation for the meantime until the government approves crypto companies to be in operation again.
The income tax department also suggested the panel that the government should ban cryptocurrencies.
An example of a company that ceased operation is Zebpay, which announced on their blog the reasoning behind this.
“However, the recent past has been extremely difficult. The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business. As a result, we are stopping our exchange activities.”
Early this year, the Reserve Bank of India, India’s central bank, announced in a press release that that it’s banning any regulated financial entities from dealing with cryptocurrencies.