The executive director of the Reserve Bank of India, the country's central bank, said the organization is "not comfortable" with cryptocurrencies, a strong indication that India may not make bitcoin into legal tender.
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.
"As regards non-fiat cryptocurrencies, I think, we are not comfortable with them", Sen added. Something that is an alternative to the Indian rupee, so to speak.
"Fiat will be when the Reserve Bank, for example, starts issuing digital currency which you can carry in cyberspace, you don't have physical currency in your pocket", Sudarshan Sen, an RBI executive director, said at a FinTech conference in Mumbai.
The central bank had not previously disclosed its plans on cryptocurrencies and Sen did not provide any details on where discussions on the issue stand.
According to him, bitcoin is a private cryptocurrency.
It was unclear whether the group at the RBI plan to issue a recommendation on cryptocurrencies to the government, or if the review is at an early or advanced stage.
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.
The RBI has been repeatedly flagging concerns on virtual currencies like Bitcoins, stating that they pose potential financial, legal, customer protection and security-related risks. While this is a purported objective of a VC, it puts a natural limit for its progression.