The government is regulating cryptocurrencies in India to check their role in ‘hawala’ and terror funding. The RBI says that the use of cryptocurrencies as “intermediaries for exchange of goods or services” have become “significant.” In a statement, the RBI also said that the creation, trading, or usage of virtual currencies as a medium for payment is not authorized by any central bank or monetary authority. It also added that it has been examining these developments and their implications around the world.

But apart from this, some countries like Japan and Australia are exploring this new technology extensively with many startups coming up in this space. Government officials here say that they will not ban cryptocurrencies but will regulate them to check their role in ‘hawala’ and terror funding. The Centre’s decision to bring a bill in the upcoming Winter Session of Parliament to regulate cryptocurrency has sent Bitcoin prices plummeting, to the lowest in a month.

As markets and experts speculate on the consequences of the decision, sources in the security establishment told CNN-News18 that the regulation is not an outright ban. Crypto misuse will be regulated by the government, although the underground transactions happening with crypto are concerning. The government is worried about crypto’s use in ‘hawala’ and terror funding; however, this may be inevitable given the anonymity of crypto transactions.

They said that cryptocurrency will not be considered legal tender, as this could put the country’s current currency system at risk. They added that there will be a system in place for law enforcement to trace where cryptocurrency is coming from.

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There are many articles that state the government’s intention behind the legislation is to keep cryptocurrencies from being used for money laundering or terrorism. The prime minister discussed AI in his meeting earlier this month and there was general agreement about the steps the government will take. They will be progressive and forward-looking. The speaker then discussed that “unregulated” crypto markets cannot be let to become avenues for money laundering and terror financing.

The cryptocurrency bill, which concerns the regulation of digital currencies, is among 26 bills introduced in parliament this Winter session. This comes a week after a Parliamentary panel chaired by BJP leader Jayant Sinha discussed the merits and drawbacks of crypto finance with various stakeholders. After coming to an agreement that digital currencies can’t be stopped but must be regulated, India’s economic minister Arun Jaitley said, “The idea is not to stop them but regulate them.”

This bill aims to prohibit all private, nongovernment cryptocurrencies in India and also intends to create a framework for the creation of a government-backed digital currency.