Finance Minister Arun Jaitley Says Will Eliminate Use of Cryptocurrencies

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BERLIN, GERMANY - FEBRUARY 15: In this photo illustration model Bitcoins standing in front of Dollar bills on February 15, 2016 in Berlin, Germany. (Photo Illustration by Thomas Trutschel/Photothek via Getty Images)
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For people who have track Bitcoin and other forms of cryptocurrency in India, the Union Budget 2018 speech by Finance Minister Arun Jaitley comes with a large helping of bad news. Speaking to the nation, the minster explicitly reiterated that cryptocurrencies are not legal tenders, saying that their use “as part of the payment system” will be eliminated. However, the minister didn’t explicitly mention anything about trading in cryptocurrencies like Bitcoin.

As part of the Budget 2018 speech, the Finance Minister said: “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.”

This statement is in line with earlier announcements by the government as well. As early as September last year, before the Bitcoin surge, the RBI had said that it is not comfortable with Bitcoin. More recently, at the start of the year Finance Minister Jaitley had said that Bitcoin is not legal tender in India.

At the time, he said: “The government is examining the matter. A committee under the chairmanship of secretary, department of economic affairs, is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken.”

At this point, the government has not said more than that Bitcoin is not legal tender – whether this means that coin exchanges can continue to function hasn’t been made clear. Shops and service providers who accept Bitcoin – a small niche, definitely – would likely have to stop, but the impact on buying and selling Bitcoin as an asset is less clear at this point.

There are a number of coin exchanges in India – some prominent ones include Koinex, Zebpay, and Unocoin. For now, the reaction seems muted. “Nothing new was quoted by our Finance Minister in the budget announcement today. It was a repetition of the same old cohort whilst the industry was expecting clarity over taxation and it’s regulation from the Government,” says Shivam Thakral, co-founder and CEO Delhi-based BuyUcoin. “The Government has vehemently mentioned to keep a control on the crypto market. Cryptocurrency and Bitcoin has garnered eye balls today as these have been mentioned in Indian budget for the first time. Industry is expecting clarity from the Government.”

The Government will explore use of Blockchain technology – which is the backbone of Bitcoin and many other crypto currencies – proactively for ushering in digital economy, the Finance Minister said in the Budget 2018 speech.

At the same time, there have been reports of at least one Indian bank issuing notices to customers against dealing in cryptocurrencies, warning that the account may be blocked on direction of the RBI or Ministry of Finance. It’s possible that this points to the general direction the Budget will lead in, or it could be a case of the bank being overly cautious.

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