Need for regulation of Virtual Currencies in India

Abstract
A digitally tradable type of value known as a virtual currency can be employed
as a means of exchange or as a monetary unit. These currencies lack the status
of being accepted as legal money. All parties are required by law to accept the
Centre's legal tender as a form of payment. In this essay, we will contrast the
legal frameworks for virtual currencies in China, Russia, and India. The legal
system states that legislation pertaining to securities is not likely to apply to
virtual currencies like Bitcoin or Crypto. There is currently no regulatory
guidance on how to apply the non-exhaustive definition of securities provided
by the Securities Contracts (Regulation) Act of 1956 (SCR) to virtual
currencies.

An Inter-Ministerial Committee was established in November 2017 to

investigate the problems with virtual currencies and suggest solutions. After
being formed for two years, the Committee produced a report that contained an
analysis of the legal and policy framework for the regulation of virtual
currencies. The problems with virtual currencies stem from the fact that they are
difficult to govern due to their decentralized nature. The speed at which they are
completed is the primary distinction between digital rupee transactions and the
existing digital payment environment.

The Reserve Bank of India's recent announcement regarding the launch of the
Central Bank Digital Currency (CBDC) may result in a more reliable, effective,
regulated, and legal-tender-based payment option.