India: Cryptocurrency may not be legal tender but is it illegal?

Finance minister Arun Jaitley’s statement that cryptocurrency is not a legal tender has elicited different interpretations across the industry. While some claim that the use of cryptocurrency itself is illegal, there is another faction in the industry that believes that the trading of cryptocurrency at exchanges has not been banned.

Cryptocurrency is digital currency where encryption methods are utilized to oversee the creation of currency and check the transfer of capital in a decentralized way.

What Jaitley said was”the government does not think cryptocurrency legal tender or coin and can take all actions to remove employing these crypto assets in fund illegitimate activities or as part of the payment procedure.”
Jaitley also added that the government is not against blockchain technology. “The authorities will explore the usage of blockchain technology for ushering in the digital market,” he’d stated, from the budget speech.

This essentially means that just like gold, cryptocurrency will not be a part of the official payment system. However, it can be traded across exchanges.
Meanwhile, the government is considering a framework to regulate cryptocurrency by the end of this financial year, given that the virtual currency can be used for money laundering and terrorist funding.
In December, the government had constituted a committee to study the impact of cryptocurrencies and to make recommendations to regulate them.
Because of government’s concerns, cryptocurrency users have also been under the Income Tax scanner. Last month, the I-T department had sent notices to those transacting in cryptocurrency.
After India clampdown, Bitcoin declined by 8.7% on Thursday (budget day) to $9,100, the lowest since November 2017. Bitcoin slumped to its low for the year after seeing more than $44 billion in market value lost during January due to questions on global regulation and viability.
Even Facebook on 31 January announced it was banning all of the advertisements associated with cryptocurrencies in a bid to resist scams. Facebook, in its own advertising policy, stated that it’s barring advertisements for”financial services and products which are often connected with misleading or deceptive promotional methods, including binary possibilities, first coin offerings, and cryptocurrency”.

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