According to a government statement, the report and draft legislation released by the panel behind the recommendation will be examined by regulators and the government before taking a final decision. The given 18-page draft proposes a definition of cryptocurrencies as
“any information or code or number or token not being part of any Official Digital Currency, generated through cryptographic means or otherwise, providing a digital representation of value.”
“Nasscom believes that the recent proposal of the inter-ministerial committee of the government to ban all cryptocurrencies barring those that are backed by the government is not the most constructive measure. […] Instead, the government should work towards developing a risk-based framework to regulate and monitor cryptocurrencies and tokens.”
They say that there can be regulations to control illicit activities in the crypto ecosystem. They even go on to recommend regulatory sandboxes to test out crypto projects before mass-adoption.
“We should work towards creating a regulatory framework that will constantly monitor and prevent illegal activities. Regulating would allow the law enforcement agencies to be better equipped to understand these new technologies, enable them to gather intelligence on criminal developments and take enforcement actions.”
“The committee's recognition of the potential of Distributed Ledger Technology (DLT) is a welcome step towards enhancing innovation in the ecosystem. We look forward to engaging with the government in considering how DLT can be used in India, to improve transparency, access to information and citizen services.”
In addition to that, the Payments Council of India, which is a lobby group for the payments industry in the country, also voiced its concerns about the developments. It stated that the sandbox is unclear on the regulation regarding cryptocurrencies, and the exclusion of such a large group of potential currencies of the future is not a great thing.