Blockchain Technology: Prospects and Challenges

Govt rules out any immediate action against cryptocurrencies


Mains Paper 3: Economy | Effects of liberalization on the economy

From UPSC perspective, the following things are important:

Prelims level: Cryptocurrencies, bitcoin, Ponzi schemes

Mains level: Rising usage of cryptocurrencies and its effects on economy

Not taking any knee-jerk action

  1. Finance minister ruled out any immediate action against cryptocurrencies
  2. The finance ministry is awaiting the report of a panel constituted to deal with cryptocurrencies

Government action

  1. At present, both the government and the Reserve Bank of India (RBI) do not regulate virtual currencies
  2. Last week, the finance ministry warned against investments in virtual currencies, including bitcoin
  3. It likened them to Ponzi schemes as they are not backed by any assets and do not have any intrinsic value
  4. The warning followed a surge of investments in bitcoin because of a spurt in its price
  5. Last month, the income tax department conducted a survey of bitcoin exchanges across India to secure information about transactions, parties involved and bank accounts used

Expert committee to give report on cryptocurrencies

  1. The government constituted the committee, comprising officials of the finance ministry, home ministry and RBI, among others, last year
  2. It is tasked with finding ways to deal with virtual currencies and address issues relating to money-laundering and consumer protection
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