India Government Says No To Cryptocurrency Yes To Blockchain
India is the latest country to air its concern about cryptocurrency trading, joining a growing list of countries that have announced crackdowns in the recent past. The country’s Finance Minister, Arun Jaitley, in a budget speech has indicated that the government will do all it can to end the use of all virtual currencies in the country.
According to the minister, the government does not recognize digital currencies as a means of legal tender. However, the country remains open to facilitating the development of blockchain technology, which powers most cryptocurrencies given its capabilities and potential use.
In addition, the government has set up a committee tasked with the responsibility of understanding the implications of cryptocurrencies. The committee will also analyze regulations implemented in other countries.
“The government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities or as part of the payments system,” said Jaitley in a statement.
The sentiments are a big blow to a sector that has come under immense scrutiny after a breathtaking year that saw cryptocurrencies valuations skyrocket to record highs. India just like South Korea and Japan is home to a large number of bitcoin traders and investors, most of who will be adversely affected by any crackdown.
Reports indicate that 1 in every 10 bitcoin transactions takes place in India. Bitcoin prices in the country have been consistently high than in other countries, partly because of the country’s capital system. The system makes it extremely difficult for people to buy bitcoins abroad and for foreign investors to take advantage of the country’s high prices.
There have also been reports that some people are using bitcoin and other cryptocurrencies to transfer money across borders, thus avoid capital controls. The digital currencies are also being used for tax avoidance purposes.
Reports indicate that India’s income tax department sent notices to people dealing in cryptocurrencies with a view of collecting taxes form them. The move is believed to have been prompted on reports that $3.5 billion worth of transactions had been conducted over a 17-month period.
The Indian Government and the Reserve Bank of India are on record complaining about cryptocurrencies trading. A point of concern has always been the heightened risk of investment that could see citizens loses huge chunks of money especially on the emergence of Ponzi Schemes.
India joins China which last month hinted at the possibility of widening its crackdown on virtual currency trading. Beijing authorities have already banned cryptocurrencies trading in the country as it continues to maintain its hard stance.
The Indian government is likely to come up with a legislative mechanism or make suitable amendments to existing legislation in a bid to stem cryptocurrencies activities in the country.