India's capital market regulator is talking with the government and central bank about how to regulate cryptocurrencies, its chairman said on Wednesday.
The Securities and Exchange Board of India (SEBI), plus officials from the Ministry of Finance, Ministry of Electronics and Information Technology and the Reserve Bank of India (RBI), are on a panel tasked with determining the legal oversight for cryptocurrencies such as Bitcoin, Chairman Ajay Tyagi said.
"There has to be a process or law, only then can you take action," Tyagi told reporters on the sidelines of a Confederation of Indian Industry conference in Mumbai.
India currently has no regulation for cryptocurrencies, and like other global policymakers, it is seeking to understand how to supervise a market that many feel is a speculative bubble.
Earlier this month, the RBI said it was concerned about Bitcoin, just days after the cryptocurrency hit a record high of just under $11,800, stocking fears that a rapidly swelling bubble could burst.
Last week, India's central tax authority also said it was surveying Bitcoin exchanges to find out whether it can tax any transactions.
Thousands of transactions are taking place every day in unregulated cryptocurrency exchanges and the Income Tax Department has launched surveys in the cities of Delhi, Mumbai, Pune, Bengaluru and Hyderabad, spokeswoman Surbhi Ahluwalia said.
The RBI had previously said those trading in virtual currencies were doing so at their own risk, given that the central bank had not given a licence or authorisation for any company to deal in such cryptocurrencies.
The tax official declined to comment on the central bank's concerns, saying the tax department was looking only into the tax implications.
The government has set up a panel to decide on India's stand on cryptocurrency. This year, the government told parliament that the use of virtual currencies like bitcoin was not authorised by the RBI and could result in breach of anti-money laundering laws.