Dr S.P. Sharma, chief economist at the PHP Chamber of Commerce and Industry, told the Economic Times that bitcoin needs regulatory oversight before India will grant it legal status as a currency. Bit
Dr S.P. Sharma, chief economist at the PHP Chamber of Commerce and Industry, told the Economic Times that bitcoin needs regulatory oversight before India will grant it legal status as a currency.
Bitcoin occupies an ambiguous space in India's financial system. The government has neither banned the digital currency nor granted it official recognition. Sharma views this gray zone as a barrier to acceptance. "Unless the cryptocurrency is properly and comprehensively regulated and monitored by a robust institution, I don't see bitcoin becoming a legal currency in India," he said in the interview.
The government launched a cashless initiative following demonetization in November, a policy designed to reduce cash circulation in the economy. During this period, Finance Minister Arun Jaitley observed "notable growth" in India's bitcoin market. The digital currency gained traction as individuals and businesses sought alternatives to traditional payments. Still, bitcoin remained in legal limbo with no official framework governing its use.
The question of who would oversee cryptocurrency remains unsettled within government. The Reserve Bank of India could take control. The Securities and Exchanges Board of India might instead claim jurisdiction. Either way, a decision remains pending. Reports suggest the government will not move to declare bitcoin illegal. India itself is exploring creation of its own digital currency, structured along lines similar to bitcoin.
Sharma cautions that prolonged regulatory uncertainty invites multiple dangers. Regulatory gaps create openings for illicit schemes as bitcoin demand grows. Scalability constraints could hinder the network as transaction volumes increase. Hackers pose threats to exchanges and individuals. Price swings lack any pattern or direction. "It is the most volatile asset in the global market and it is highly speculative," he said.
Thieves target wallets kept on computers and phones. If someone steals such a device, the owner loses access for good, with no recourse through official channels since bitcoin lacks legal recognition. Each stolen device represents a total loss.
Sharma urges caution. Anyone buying bitcoin should prepare to lose their entire investment. "You need to be prepared to lose everything you invest," he said. The possibility of perpetual price growth should not drive investment decisions. Bitcoin remains unproven as a long-term store of value.
