The Finance Minister’s statement in his Budget speech on crypto currencies does not mean that it is illegal to hold these currencies, but only means it is illegal to transact using them in place of legal tender, according to industry players and analysts.
“The Government does not consider crypto currencies 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,” Mr Jaitley said during his speech. “The Government will explore use of block chain technology pro-actively for ushering in digital economy,” he added.
“The Finance Minister in his budget speech has reiterated the stand by the Reserve Bank of India that crypto currency is not recognised as a legal tender in India,” Nischint Sanghavi, Head of Exchange, Zebpay, said. “This is being misreported that bitcoin is illegal. This is not true,” he added.
“This is not the first time Mr. Jaitley has said that crypto currencies are not legal tender, and should not be treated as such. As far as it not being a legal tender, Finance Minister Arun Jaitley in the Rajya Sabha on January 2 said exactly the same thing,” Ajeet Khurana, Head of the Blockchain and Cryptocurrency Council of India, said. “There is nothing new, no change in the way the government is handling this. And, coincidently, it is the position of almost all the governments across the world,” he pointed out.
“Legal tender is only coins and currency as defined by the RBI,” Mr. Khurana said. “So, gold, stocks, bonds are not legal tender. But the fact that they are not legal tender makes no comment on whether they themselves are legal or illegal. In fact, what people have missed is that Mr. Jaitley has used the word crypto assets for the first time. That is a very positive sign. He is recognising it as an asset,” he added.
However, other commentators say that the government clarifying its stand is a good thing in the wake of misunderstanding in the market and the fact that Bitcoin prices have been skyrocketing.
“With no regulations governing virtual currencies in India and despite no licences granted to any entity to prevent them from operating in such currencies, there is a heightened risk of investment bubble which may have resulted in sudden and prolonged crash exposing investors,” Kartik Shinde, Partner – Cyber Security, Financial Services, EY India, said.
