Sources told TOI that both the agencies responsible for the overall functioning of the economy and the financial system are in favour of using the technology for the digital payment space but are worried over the impact on broader economy, including use of cryptocurrency as a medium of exchange and its possible misuse for terror finance and money laundering, a worry that several global agencies have also expressed.
The finance ministry is working on a bill and had earlier indicated that it would ban the use of cryptocurrency, such as Bitcoin, in the country. In fact, the RBI had barred banks from dealing with cryptos a couple of years ago, making it illegal to trade in India, but the restriction was lifted by the SC in 2020. This was seen to have prompted the government to come with a legislative framework, which is currently missing. The proposed legislation has set off lobbying by the crypto exchanges, who have argued that cryptocurrency is not a medium of exchange but an asset class.
