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The Indian government, for years considered anti-cryptic, is ready to give the go-ahead to embrace technology under strict regulation. Nearly one-fifth of global bitcoin transactions are believed to occur daily in India, with hundreds of thousands of users maintaining their investments undercover for fear of government repression. This time last year, the Indian government issued severe warnings to citizens who use cryptocurrencies, labeling them all "Ponzi schemes". The Reserve Bank of India has even banned local banks from interacting with companies involved in cryptocurrency.
This led some of the country's trade to appeal to the supreme court which, in turn, insisted that the government objectively look at industry.
After asking for an investigation into their use, ministers have now warmed up on the prospect of digital resources that have future use cases for India and its massive 1.3 billion inhabitants.
The country had been on the verge of completely banning the cryptocurrency, with the authorities' demands to make bitcoin property and trade illegal.
It is understood that some ministers even wanted to get to the prison of serial criminals.
With about 2.5 million bitcoin users alone, the task of any clampdown attempt seemed impossible.
Thus a government task force was created in New Delhi to report on the direction that any potential legislation should adopt.
A senior government advisor said: "But they essentially fueled a complete awakening of official thinking.
"Recognizing the tremendous amount of hard-to-come cryptocurrency in all 29 states, research has now forced the hand of the government to align with the obvious talent of India in digital technology."
The result of the report, which will be presented by the end of February, should pave the way for widespread regulation of cryptocurrencies and their use throughout India, but also signals the acceptance by New Delhi that bitcoin has a huge future in the nation.
The adviser said: "It is not just one of the world's largest populations to be approved to go ahead with the adoption of things like bitcoin.
"This will also have far reaching effects worldwide because there are exchanges, portfolios and suppliers all over the world with huge customer bases in India where, until now, people thought it would be made illegal.
"Now it will be the opposite situation that can only see those customer bases growing exponentially".
