NEW DELHI: India’s Finance Minister Arun Jaitley on Thursday said all crypto currencies, which include bitcoins, are illegal and the government of India will take all measures to eliminate their use.
He, however, said the GoI will explore use of blockchain technology proactively for ushering in the digital economy.
Distributed ledger system or blockchain technology allows organisation of any chain of records or transactions without the need of intermediaries, he said in his Budget speech.
“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,” he said.
Last year, Jaitley had informed Parliament that there are no regulations governing virtual currencies in India and the RBI has not given any licence to any entity/company to operate such currencies.
The GoI in December cautioned investors to be wary of virtual currencies like bitcoin, saying they are like Ponzi schemes with no legal tender and protection.
“There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes,” the Finance Ministry had said in a statement.
Virtual currencies (VCs) are stored in digital/electronic format, making them vulnerable to hacking, loss of password and malware attack which may also result in permanent loss of money, it said.
Noting that there has been a phenomenal increase in recent times in the price of VCs, including bitcoin, in India and globally, it said they do not have any intrinsic value and are not backed by any kind of assets.
However, experts feel that government of India should consider regulating rather than banning crypto currencies completely. “The government should consider regulating crypto currencies than curbing their use entirely,” said MobiKwik Co-Founder Bipin Preet Singh.
“While there could be several risks associated with crypto currencies, the fundamentals of the underlying blockchain technology or distributed ledger system is strong.
Blockchain technology will find many good use-cases not only in private businesses but also in governance,” said Anshuman Verma, CEO of M1L and The Invention Factory.