For a long time now, the legality of cryptocurrency in India has been in the grey zone. People often wondered if Bitcoin is legal in India.
Is Bitcoin Illegal in India?
Finance Minister Arun Jaitley has made it clear once and for all in his budget 2018 speech, that any cryptocurrency is not a legal tender in India. With this statement, he has put an end to all speculations on the fate of cryptocurrencies in India.
However, you must note, the FM means to say cryptocurrencies cannot be used a legal tender – to buy commodities or services. However, it can still be purchased as an asset – similar to how gold is.
Finance Minister, however, acknowledged the power of blockchain and distributed ledger technology. He also said that government will make focused efforts in exploring the prospects of this technology.
Blockchain technology has the capability of keeping a track of all the transactions without needing a central authority to manage it. This feature endows it with transparency and hence makes it suitable for a plethora of applications in future.
Concern of the Government Regarding Cryptocurrency
- First is the threat of scams brewing around this new asset. As for many people specially the uninitiated ones, bitcoins and other cryptocurrencies are portrayed as something which is capable of earning fortunes overnight. And hence the chances of them falling prey to all such Ponzi Schemes are really high.
- Secondly, Government also fears that the kind of anonymity that is attached with Bitcoins and other crypto currencies opens new avenues for people who possess black money. There is a high probability that Bitcoin may emerge as the next Swiss Bank for hoarders to dump their money from illegitimate sources.
- Finally, crypto currency also poses a major threat to national security as there are rumours that it is being used in underworld to fund terrorism and other anti national activities. Government continues to believe that absence of any sort of dependence on State makes it really difficult to keep a check on its use in activities like terror financing.
The Finance Minister appears in no mood to jump in this territory without clearing out the uncertainties that loom over it.
As far as Government’s commitment towards building a digital India is concerned there are no doubts about it. Yet as of now, State has cleared all the doubts about legal status of cryptocurrencies by reiterating that there are no legal safeguards for people trading in cryptocurrencies.
Disclaimer: the views expressed here are those of the author and do not reflect the views of Groww.