The Union Ministry of IT and Electronics is analysing the models developed by countries including Australia, the US and Canada to bring digital currency under the ambit of regulations.
In this context, the ministry has called a meeting of top IT majors including Infosys, TCS to understand blockchain technology which is used in cryptocurrency or digital currency such as bitcoins and to explore how it can be implemented by the government.
"IT companies such as Infosys, Wipro and Cognizant have made significant investments in blockchain technology. Even Indian banking sector has started using this technology. Besides bitcoins, we want to see how blockchain technology can be used in government," a senior official from the ministry told DNA Money on the condition of anonymity.
"Also, we are looking at various models being framed globally before finalising guidelines on bitcoins. The foremost issue is whether we need to legalise such currencies or not. Then if it is legalised, how can we keep a track of all the transactions happening through this medium," the official said, explaining the need to understand the blockchain technology.
The issue of whether virtual currencies should be banned, regulated or self-regulated has been going on for some time.
As per a presentation by the ministry, ICICI Bank has successfully executed its first two transactions using blockchain technology during October 2016 while YES Bank has implemented a multi-nodal blockchain transaction during January this year to provide technology-enabled efficient services to customers.
Kotak Mahindra Bank and Axis Bank have also announced their interests in this and started conducting pilot transactions, according to the official.
The finance ministry in consultation with other ministries, including IT and electronics, is studying the implications of bitcoins in the country and deliberating on whether it needs to be legalised or not. Though, the government had earlier said that the use of virtual currencies like bitcoins is not authorised by the Reserve Bank of India and could result in the breach of anti-money laundering provisions.
In April this year, the finance ministry had constituted a committee on this issue. The committee will suggest measures to deal with virtual currencies including issues relating to consumer protection and money laundering, the finance ministry had said in a statement. It will also assess existing framework of virtual currencies in India and globally as well as examine the existing global regulatory and legal structures governing virtual currencies.
As of January 2015, the total number of bitcoins in circulation globally was about 13.7 million with its market price of about $200, Bitcoins' current capitalisation is around $2.7 billion. There are about 90 virtual currencies operating globally.
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- ICICI Bank has executed two transactions using blockchain technology
- YES Bank implemented a blockchain transaction in January
