India has been running the cryptocurrency errands too, along with the world. With Bitcoin making news all over the world in the past few months, the nation was expecting the government to provide some clarity on cryptocurrencies. The FM in Budget 2018 has said that the government does not consider cryptocurrencies a legal tender. The Indian government looks forward to taking measures against their use for illegal activities.
On the other hand, the government will be encouraging and adopting the use of blockchain technology underlying such cryptocurrencies for payment systems. The same can also be used in various other fields like insurance and banking.
The exact words of the FM are, “ Cryptocurrencies are no legal tender and the government discourages its use. However, the government will look at the utilization of Blockchain- a distributed digital technology that supports cryptocurrencies.”
Cryptocurrencies were in limelight last year with multi-fold returns. For instance, the most talked about bitcoin climbed to Rs 6,37,142 on January 31, 2018, from Rs 66,426 on February 1 last year, an 859 percent growth.
“Will take all measure to eliminate the use of crypto in financing illegitimate operations,” said the Finance Minister Arun Jaitley.
The conclusion stands to note that the government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payments system. Basically, nothing changes. The announcement just affects and aims to curb the use of these virtual currencies for illegal and illegitimate activities like terrorist financing.
Consider a very important point put forth by Rashmi Deshpande, Associate Partner, Khaitan & Co, a leading law firm as she says, “The announcement on the cryptocurrency should not be misinterpreted. The intention is more likely to regulate the circulation to avoid its use for illegal transactions.”
This unsurprising declaration has been a long time coming over the past few months. The recent high number of Bitcoin transactions in the country has had both investors and the RBI worried. The finance ministry has in the past called cryptocurrency a Ponzi scheme, and the RBI has cautioned Indians to not engage in the trading frenzy as it lacks legitimacy and is unsafe for investors. Sebi and the Income Tax department, too, had voiced their concerns over the use of digital currencies, which are virtually untraceable and can be used to evade tax and fund illegal activities. Finally, the ultimate disclosure is out.
Exactly what the nation wanted to know.