The Parliamentary Standing Committee on Finance, headed by BJP MP Bhartruhari Mahtab, has examined various aspects of Virtual Digital Assets (VDAs), a legal term covering cryptocurrencies and non-fungible tokens (NFTs), and held more than half a dozen meetings on the issue.
The committee is now preparing its report for submission to the Lok Sabha Speaker.
Among the recommendations being considered are measures for monitoring cryptocurrency transactions and wider consultations on how digital assets should be dealt with legally, the person said.
The panel may also recommend that the government deploy newer technology to strengthen monitoring of digital assets.
The deliberations come as India does not currently recognise cryptocurrency as an asset and has not put in place a comprehensive regulatory framework governing such digital assets.
The government has previously told Parliament that crypto assets are inherently borderless and that dealing with them requires international cooperation to prevent regulatory arbitrage.It has also maintained that any legislation seeking to regulate or ban virtual digital assets can be effective only with international collaboration to assess their risks and benefits and develop common standards and terminology.
The Finance Ministry last month cautioned the public that cryptocurrency products and NFTs remain unregulated and can carry significant risks. It also warned that investors may have no regulatory recourse in the event of losses from such transactions.
At the same time, authorities have stepped up scrutiny of entities providing services linked to virtual digital assets.
The Financial Intelligence Unit-India (FIU-IND), which operates under the Finance Ministry, recently issued non-compliance notices to 15 Virtual Digital Asset Service Providers under the Prevention of Money Laundering Act, 2002.
Virtual Digital Asset Service Providers were brought within India’s Anti-Money Laundering and Counter Financing of Terrorism framework under the PMLA in March 2023.
Cryptocurrencies are digital currencies that use encryption to facilitate and verify transactions and generally operate without a central bank.