The Reserve Bank of India (RBI) has a group looking into cryptocurrencies as legal tender, a senior official said on Wednesday, but emphasised the central bank's discomfort with bitcoin which has recently come under intense global regulatory scrutiny.
With the Indian government now trying to move toward a fully digital economy, it has initiated the flagship Digital India initiative and research programs to drive that process forward.
"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", Mr Sen said.
RBI had not previously disclosed its plans on cryptocurrencies and Mr Sen did not provide any details on where discussions on the issue stand. On the other hand, the RBI is not comfortable with non-fiat cryptocurrencies like bitcoin, he said.
Elaborating on what is a non-fiat cryptocurrency, Sen said: "Bitcoins for example".
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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.
"I believe its potential is being overstated".
A fiat currency is the legal status given to a currency issued by the central bank.
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).
Earlier this week, JPMorgan Chase & Co chief executive officer Jamie Dimon also came out strongly against bitcoin dubbing it a "fraud", and adding that it will blow up.
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