Today, the Finance Minister of India delivered the annual budget to Parliament. In the budget announcement, the Finance Minister, Mr. Arun Jaitley, said that cryptocurrencies were not legal tender and are not recognized as forms of payment for goods and services. He further went on to say that the government would crackdown on the illicit use of cryptocurrencies. The mainstream Indian press, erroneously, took this to mean that cryptocurrencies would be banned in India and a full FUD attack was in play. Bitcoin even crashed to approximately ₹ 230,000 (approximately $3,600) on an Indian exchange before rapidly recovering.
However, nothing the Finance Minister announced was a departure from Indian policy dating back to 2013. The Reserve Bank of India and the government of India have been saying publicly that cryptocurrencies are not legal tender and they are highly risky assets that should be avoided. The RBI, India’s central bank, has been putting out regular circulars cautioning the public against ponzi schemes purporting to be investments in Bitcoin or other cryptocurrencies.
No exchanges in India have been shutdown. Buying and selling cryptocurrencies as an asset is still not illegal and, hence, major exchanges like Zebpay, Coinsecure, etc are still operational. In my opinion, there is a high degree of likelihood that the Indian government will put out some stringent regulations around the trading and use of cryptocurrencies but I believe they will stop short of an all out ban. Expect the committee that is reporting on the use of blockchain and cryptocurrencies to the Finance Ministry to provide a recommendation in the coming months. An all out ban would be shocking and deeply disturbing. However, mandatory linking of a government id to the purchase and sale of crypto assets would not be far fetched, if not difficult to implement in the real world outside of onramps like exchanges.
Hear part of the Finance Minister’s speech talking about blockchain and cryptocurrencies below.
Also published on Medium.