RBI looking at cryptocurrency, but wary of bitcoins: Reserve Bank Executive Director

The Reserve Bank of India today said they are looking at fiat cryptocurrencies but is not comfortable with bitcoins or virtual currency (VC).

Sudarshan Sen, RBI Executive Director, said, "Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely."

A fiat currency is the legal status given to a currency issued by the central bank.

"As regards non-fiat crypto currencies, I think we are not comfortable...non-fiat cyptocurrencies like bitcoins, for example," Sen said at a fintech event by KPMG.

According to him, bitcoin is a private cryptocurrency. "Fiat will be instead [when] the Reserve Bank starts issuing digital crypto currency, which you can carry in the cyber space with you, when you don't have to keep physical currency in your pocket, that's the way," he said.

Last month, the Finance Ministry said it will work out a roadmap to regulate the use of virtual currencies such as bitcoins based on the report of an official committee that has suggested not to legalise them.

According to a PTI report, Reserve Bank had flagged possible "black money" risks from virtual currencies like bitcoins, to a parliamentary panel that they are "susceptible to misuse" by terrorists and fraudsters for laundering money.

The Reserve Bank of India further said it has not given any licence and authorisation to any entity or company to operate such schemes or deal with bitcoins or any virtual currency (VCs).

As such, any user, holder, investor, trader, etc. dealing with VCs will be doing at their own risk, the RBI informed the parliamentary standing committee on finance.

An inter-disciplinary committee, which includes an RBI representative, has been constituted by the Finance Ministry to examine the regulatory framework with regard to virtual currencies, the central bank had said earlier.          

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