India said to be preparing to ban sale of cryptocurrencies

The Indian government is preparing to ban the online sale of so-called private cryptocurrencies, and at the same time make it more difficult for businesses to use blockchain technology in their processes. Cryptocurrencies have…

India said to be preparing to ban sale of cryptocurrencies

The Indian government is preparing to ban the online sale of so-called private cryptocurrencies, and at the same time make it more difficult for businesses to use blockchain technology in their processes.

Cryptocurrencies have gained a great deal of attention in India this year as speculation has grown as to whether the government will seek to tax cryptocurrencies – money that many people use to pay for things through digital transactions.

The country already has a ban on the import and sale of bitcoin in place, and after a consultation between central bank officials and the finance ministry, the government is set to prohibit the business of “public offering” or “know-your-customer” due to security concerns.

Currently, the government is consulting on whether and how to prevent people buying cryptocurrencies to dodge taxes and – with less-than-stellar privacy protection tools – if using private cryptocurrencies should be regulated under the Indian Prevention of Money Laundering Act.

The government is also talking about what restrictions should be put on the use of blockchain technology in creating payment systems, Reuters reported.

Bitcoins and other cryptocurrencies have been increasingly traded in India, with exchange platforms, financial institutions and banks offering their services. They have seen phenomenal growth, however, amid warnings by government officials in India and elsewhere that this has created risks.

The Reserve Bank of India (RBI) has been concerned that cyber security concerns around exchanges have made people more willing to buy virtual currencies outside the official system.

The RBI, which asked all banks and financial firms last year to register as cryptocurrencies exchanges, asked them to shut down their operations last month.

Many foreign exchange exchanges were subsequently forced to shut down their Indian branches to comply with the ban, Business Standard reported.

According to the South China Morning Post, RBI Governor Urjit Patel has argued that bank-led exchanges is a “less intrusive” means of handling the wider issue of managing new digital assets.

However, in the absence of a firm policy, private digital currencies such as bitcoin have seen a boom in popularity as companies and investors look to use the technology.

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