The government clarified its stance on the issue of cryptocurrencies by informing that the country has put in place no restrictions yet on the trading of cryptocurrencies. Minister of State for Finance and Corporate Affairs Anurag Thakur, while answering questions asked to him in the Rajya Sabha, said, "There is currently no separate law in the country to ban crypto trading, but all concerned departments like RBI, Enforcement Directorate, Income Tax Authority, and other legal agencies are authorised to deal with cryptocurrency issues as per existing laws."

This clarification comes in light of the fact that the Reserve Bank of India (RBI) has maintained a strict stance against cryptocurrencies in the country, based on the premise of its potential misuse. Earlier, the central banking institution had issued a circular banning crypto businesses from receiving services from regulated entities. The official website for the cryptocurrency 'Bitcoin' -- Bitcoin.com -- reported on Friday that the ban has been effective since July 6 of last year.

Back in the Upper House of the Parliament, the Minister of State was facing questions regarding the government's perspective on this issue. He said that even though the government had not issued a blanket ban on cryptocurrencies, it has been working along with the RBI in issuing public circulars, press releases, and advisories to inform the populace about the potential risks and dangers associated with cryptocurrencies. "Similarly, the police and courts are authorised to take action on matters in accordance with the Indian Penal Code (IPC)," he added.

However, a draft bill banning cryptocurrency is currently underway, according to reports, led by Economic Affairs Secretary Subhash Chandra Garg. 

According to the draft "Banning of Cryptocurrency Restrictions and Official Digital Currency Regulation Bill 2019", a person will face a jail term of up to 10 years for holding, selling and trading in cryptocurrencies like Bitcoin.

A cryptocurrency is an online virtual currency that is based on the Blockchain system of distributed ledgers in computers across the world (therefore needing to be 'mined' in order to generate it). It uses cryptographic security for protection and generates value based on a global virtual economic network.