The Union Finance Minister Arun Jaitley yet again made the government’s stand clear about the much-discussed cryptocurrencies in the country.
In his budget speech on Thursday, Jaitley categorically stated “the government does not consider cryptocurrencies legal tender or coin” and hinted at a crackdown on the illegal activities being carried out under virtual currencies.
The announcement by Jaitley came as a major set back for the investors and traders of the virtual currencies. The price of popular cryptocurrency, Bitcoin quoted at ₹791,821 on Zebpay.com.
According to insiders, the prices turned volatile on Thursday after the announcement by Jaitley and fell sharply by close to 40 per cent on Zebpay before recovering in the later transactions.
However, the cryptocurrency participants maintained that in the lack of the regulations, the government tries to play safe.
“The Finance Minister has not banned the currency. There is nothing that he said about its legality. Currently, there is no mechanism to regulate money laundering through these currencies, but that doesn’t make it illegal. The investors need not panic,” said Sidddharth Sogani of consultanncy firm Block Next Solutions LLP.
In his speech, Finance Minister stated: “Distributed ledger system or the blockchain technology allows organisation of any chain of records or transactions without the need of intermediaries. The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
‘Will explore blockchain’
However, Finance Minister clarified that the Government was open to explore “the use of blockchain technology proactively for ushering in digital economy.”
“Government looking at blockchain implementation is a very positive step and appreciable. It shows they are understanding the merit in this technology. A lot of financial institutions have already started testing blockchain in India and several government overseas are using it for a variety of sectors. In India, this will be the first level adoption and that is coming in the financial sector,” said Girish Nuli of Blockchain Training.
As per an estimate projected by the cryptocurrency players in India, the virtual currency market has already touched ₹40,000 crore in India over the past 17 months.
“The current statement coming from the Finance Minister is an indication of a status quo on cryptocurrencies. They are not banning it. But we hope they come up with some regulation on it. Right now, we are not there yet. Until the regulations are made, they don’t seem to be banning it or allowing it,” added Nuli.