The Karnataka government is in the process of evolving a policy for cryptocurrencies or virtual currencies , such as Bitcoin . The move has been impelled by the rising market size and investor base of virtual currencies, apart from reports of fraud."Government will soon host a seminar to understand block chains for governance & Bitcoin. If necessary, we will evolve a policy," tweeted IT-BT minister Priyank Kharge. The state feels the industry needs some government oversight and can't be left unregulated.At present, Bitcoin is neither illegal nor legal in India. While the state government may provide a legitimate platform to Bitcoin and blockchain users, an association of companies called Digital Assets and Blockchain Foundation India (DABFI) has held meetings with stakeholders of the Union government to convince the Centre to legitimize the digital currency Bengaluru-based Bitcoin exchange Unocoin is claimed to be one of the preferred Bitcoin wallets in the country. Having started in 2013 with a few thousand subscribers, the company this year has touched 3.5 lakh subscribers who use the exchange to transact in the digital currency.While most may associate Bitcoin with the recent spate of ransomware incidents, advocates of the digital currency suggest that it can be a better and faster mode of transaction. "This debate over whether Bitcoin can be used for legitimate transactions seems to have spurred the Karnataka government to take the lead over trying to build a consensus over the cryptocurrency and formulate a policy for it," industry sources said.Kharge said a seminar will be held by August-end to discuss on whether such a policy is needed. "The seminar will give a perspective on whether Bitcoin should be used as a digital currency or as a securities or commodities. We will also see whether the platform of blockchain, which boosts efficiency in government administrations, can be used. Based on the inputs we receive from the stakeholders, we may consider a policy," he said.The minister said he has already spoken to several Bitcoin companies and startups on the issue.Bitcoin exchanges are elated by the government's move. "Exchanges like ours have self-regulation such as including know your customer and anti-money laundering norms. We are ready to incorporate further norms that the government wants. We can act as a barrier for people misusing Bitcoin for illegitimate transactions," claimed Abhinand Kaseti, co-founder and CMO of Unocoin. He said countries such as Japan and South Korea have already taken the lead in legitimizing the cryptocurrency.Cyber experts, on the other hand, claim that Bitcoin may derail an economy by becoming a parallel currency. "While Bitcoin has not yet picked up in India, and we there are users primarily on the dark web. Legitimizing Bitcoin will serve no purpose for the country, and without recognition from either RBI or SEBI , it is void of any taxation or earning for the country. It will, however, give a lot of leeway to use the currency outside the norms of legitimate currency on an individual level," said cyber expert Faizan.