A government-run questionnaire inviting comments and suggestions on virtual currencies has received almost 3,000 comments from the public, with a majority of comments calling for its legalisation, and other voices calling for consumer-friendly regulations.

The poll, which started on May 21 and ends on May 31 2017, asks members of the public if virtual currencies should be banned, regulated or observed, and invites suggestions on an effective self-regulatory mechanism and consumer protection measures in case they are not regulated.

“Cryptocurrency is a form of future currency..and like other developed countries India should also welcome this positively,” reads one of the comments, posted by user Mohammed Khan. “Exchange of bitcoins must be regulated and now bitcoin exchanges in India and the companies involving Bitcoin exchange are properly based on KYC norms. So India should also view Bitcoin positively and it should be legal in India.”

Other comments seem to echo this sentiment, insisting that the Indian government set up KYC norms and impose tax under capital gains on trading activities. “I would argue that virtual currencies must be regulated. India has created its own IndiaStack and an appropriate mechanism to transfer Indian Rupees to virtual currencies must be created similar to stock exchanges/forex clearing agencies. The entire ecosystem must be regulated to ensure that money trail is available and also sovereign nature of India is not lost in the virtual connected world,” says a comment posted by user Anand Harihar.

Japan declared Bitcoins as a legal tender in April this year, causing the price of Bitcoins to spike. Australia recently declared that it will accept Bitcoins as legal currency from July 2017 and it will also be exempt from goods and service tax. Russia is planning to adopt Bitcoin as a legal payment method in 2018.

According to chart data presented by Coinmarketcap, the market capitalisation of virtual currencies stands rose to around $85 billion, from $36 billion a month ago.

The top three virtual currencies by market cap are Bitcoin, Ethereum, and Ripple.

The cryptocurrency market in India

The DABFI (Digital Asset and Blockchain Foundation of India) is in touch with the committee to address any concerns, and raise awareness on how this technology can benefit the country, said Zebpay co-founder Sandeep Goenka. “Virtual currencies have the potential to leapfrog India’s financial infrastructure like we leapfrogged landlines with mobile phones,” he said. The industry body aims to educate users about the risks in trading and investing in cryptocurrencies. India’s top VC-backed cryptocurrency startups such as Zebpay, Unocoin and Coinsecure are a part of the industry body. A Change.org petition by DABFI calling for the legalisation of Bitcoins and cryptocurrencies has received over 14,500 signatures so far.

It’s unclear how many Bitcoin users there are in India – Coinsecure claims over 100,000 users, while Zebpay said that its app recently crossed 500,000 downloads.  “My rough estimate is we have about 8-10 lakh Bitcoin users in India,” said Sathvik Vishwanath, co-founder of Unocoin.

Goenka estimates the monthly trade volume for Bitcoin in India to be around Rs 500 crores, with around 2,000 Bitcoins being traded every day. “Though this number might seem healthy, it’s peanuts compared to the global trade volume of Rs 10,000 crores per day,” he said.

Why a ban on cryptocurrencies is impractical

Mohit Kalra, co-founder of Coinsecure, said that the decentralised nature of Bitcoin makes it impractical to ban, and this will encourage the use of illegal channels like hawala networks. “The finance ministry committee understands this and we think banning Bitcoin is out of the question,” he said. “DABFI is creating a regulatory framework for Bitcoin and other virtual currencies, which we will be presenting to the finance ministry committee. If Bitcoin is regulated and all the trade happens through legit Bitcoin companies in India, it will be easier for us as well as the regulators to track down hackers and scammers.”

However, Kalra voiced concerns about companies that run MLM and Ponzi schemes in the name of Bitcoin. “Anyone offering fixed return with Bitcoin investments is (running) a scam. I’ve been in this industry for almost six years now, there is no way to determine or justify a fixed return, whether it’s trading, Bitcoin mining or any other scheme,” he cautioned. “I am also one of the founders of Digital Assets and Bitcoin Foundation Of India (DABFI), we are fighting every day to caution customers to not fall for these fixed return schemes.”

The inter-disciplinary committee appointed by the Ministry of Finance consisting of representatives from various government bodies will take stock of the state of virtual currencies, examine global regulatory structures, and suggest measures for dealing with issues such as consumer protection and money laundering.

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