Government to consider granting encrypted tokens, but not cryptocurrencies

The Indian government is considering whether to allow the use of token crypts in the country, despite its hard line on cryptocurrencies, the local paper DNA India reports on August 10th.

A commission set up by the Ministry of Finance, under the chairmanship of the Secretary of the Department of Economic Affairs (DEA), according to sources, is working on a series of regulations and roadmaps to allow the use of certain resources cryptographic in India. Once the drafts of the proposals are finalized, the legislation will be presented to Parliament, according to the DNA source.

DEA Secretary Subhash Chandra Garg, who is leading the committee, is quoted by the DNA that says:

"The committee is studying the possibility of using cryptocurrencies or cryptographic technology (distributed ledger technology) for financial transactions and also what kind of regulation is necessary for … [while] the currency is totally forbidden, the committee is discussing its other use and how it can be integrated into India. "

While emphasizing that the DLT technology – of which the blockchain is a type – it offers "many promises", Garg reported "categorically denied" the future use of the cryptocurrencies themselves "in any way", including payment systems.

Garg said that the DEA issued "different opinions" to warn people of the risks of cryptocurrencies, which are considered "a Ponzi type" scheme "and not" currencies. "Meanwhile, the Reserve Bank of India ( RBI) has issued a ban on banking relationships with companies and people scrambled, which came into force on July 5.

Garg said, however, he believes that the government can "test the waters" when it comes to allowing the cryptographic tokenization, which – if introduced – would not be able to replace legal currencies:

"You will have to physically pay money to buy a token that can be stored as a code in any basic mobile phone. It can also be used for remittances. Thus, it is easy to implement both from the technological and regulatory point of view. But in the case of cryptocurrency, it must first be allowed as legal tender currency. "

As part of its efforts, the commission will include an analysis of what it considers to be the perspectives and consequences of the government that legalizes cryptocurrencies.

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