31 May is the deadline for suggesting policy on virtual currencies, including Bitcoin, to the Indian Government

The Government and the RBI has repeatedly cautioned the citizens of the country against the use of virtual currencies such as bitcoin , dogecoin and litecoin. The problems identified include a lack of mechanisms to settle disputes, the potential to be unknowingly involved in criminal activities, and the possibility of theft or loss.

Bitcoin is treated differently around the world . In the United States and Australia, it is considered property, and Bitcoin transactions attract taxes. In China, the cryptocurrency is considered a virtual commondity. Banks and financial institutions are prohibited from making bitcoin transactions. In the United Kingdom, it is a private currency with reduced taxes. Brazil has no regulation, while Bangladesh has passed laws where bitcoin transactions can attract a jail term of up to twelve years. In India, those who profit from Bitcoin transactions may have to pay capital gains tax.

The regulatory efforts so far by the research wing of the RBI, the Institute for Development and Research, has been focused more on Blockchain , the underlying technology that supports Bitcoin transactions, instead of the virtual currency itself, and other cryptocurrencies like it. Blockchain, or distributed ledger technology is set to transform the technology landscape , starting with fintech companies. However, the questions over regulations for Bitcoin in particular, and virtual currencies in general, remain. There have been questions raised on the time that RBI is taking to regulate virtual currencies in India.

In March 2017, the Government set up an inter-disciplinary committee to examine the issue of regulating virtual currencies. The Committee is chaired by the Special Secretary (Economic Affairs) and has representatives from the Department of Economic Affairs, Department of Financial Services, Department of Revenue (CBDT), Ministry of Home Affairs, Ministry of Electronics and Information Technology, Reserve Bank of India, NITI Aayog and State Bank of India Department of Economic Affairs, Department of Financial Services, Department of Revenue (CBDT), Ministry of Home Affairs, Ministry of Electronics and Information Technology, Reserve Bank of India, NITI Aayog and State Bank of India.

The committee is seeking inputs from the citizens asking if virtual currencies should be regulated, and if so, what kind of regulations should be put into place. The deadline for giving inputs is fast approaching, and the public have to answer the questions posed deadline for giving comments is 31 May, 2017. The primary question is if BitCoin should be banned, regulated or simply observed. Suggestions for measures on consumer protection, institutions or bodies to be set up to monitor virtual currencies, and measures for ordered development of virtual currencies are solicited. Citizens can provide their suggestions directly at MyGov.in .

The majority of the suggestions so far advocate for encouraging the use of virtual currencies in India as Distributed Ledger Technologies are considered to be the future of electronic financial transactions. One of the strong reasons identified for the widespread adoption of virtual currencies, is the potential to drastically reduce corruption.