New Delhi: According to two sources reportedly involved with the negotiations, India aims to tighten cryptocurrency regulation to discourage investors from keeping them, while the government is unlikely to follow through on an earlier vow to ban private digital coins.

Instead, only those that have been pre-approved by the government could be listed and traded on exchanges, according to the sources, who asked not to be identified since the conversations are confidential. "A coin can only be traded if it has been approved by the government; otherwise, holding or trading it in may result in a penalty," claimed the first source. In the parliamentary session that begins this month, the government hopes to introduce and pass a cryptocurrency law.

Thousands of peer-to-peer currencies that thrive on being outside the scope of regulatory inspection would be hampered by such a pre-verification strategy. In his first public comments on the matter, Indian Prime Minister Narendra Modi warned that all democratic nations must work together to guarantee that cryptocurrency "does not wind up in the wrong hands, which can corrupt our youth."

US seizes USD 56 million in cryptocurrency scam, to pay victims in dollars

PM Modi gives warning on cryptocurrency, says nations need to work jointly

Know Cryptocurrency prices today: Market in red as Bitcoin, Ethereum fall