Blockchain head contradicts Finance Minister's stand on Cryptocurrency, declares 'It is not illegal'

Finance Minister Arun Jaitley talks on cryptocurrency in his Budget Speech on Thursday has left many confused and dazed.

“The government does not recognise 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,” he said. However, he added that the government is not against Blockchain technology.

The statement has led to speculations on whether cryptocurrency has been banned, or what is government’s legal stand on it.

Experts on the cryptocurrencies have other views as they see the declaration of Finance Minister usual and nothing new.

Ajeet Khurana, who recently took over as the Head of the Blockchain and Cryptocurrency Committee of India (BACC), in an interview to YourStory said that there has been no indication by the government that it is banning exchanges. Neither does it stop people from holding a cryptocurrency. It is just saying that the government doesn’t recogonise cryptocurrency as legal tender.

At present, Japan is the only country that recognises cryptocurrency as legal tender.

"FM did not make any comment on the ‘illegality’ of other assets. It must be emphasised that gold, stocks, bonds, and other such assets are also not ‘legal tender’. To extrapolate that to mean that such assets are ‘illegal’ is irresponsible," he added.

On why the government is so susceptible to the use of cryptocurrency, BACC head said that the major concern is an illicit use of cryptocurrency and have maintained this position. The bitcoin enterprises have been maintaining complete transparency through KYC and other procedures to reduce the illicit use of these.

He further said that the government needs to come up with more clarification on the payment system. He views the move as a possibility of government regulation in the future.

Recently, a number of retail investors who had purchased cryptocurrencies had been left in a bind as banks were reportedly not allowing them to deposit money earned from their trading on exchange platforms.

Banks are not thinking about the future, and this is completely a knee-jerk reaction, Khurana added. Cryptocurrency Committee is planning to hold talks with the banks to make them understand about emerging sector.

Besides, social site Facebook also announced on Wednesday that it will ban any ads related to virtual currencies as misleading or deceptive ads have no place on the social networking site.

On Thursday, bitcoin prices tumbled below $9,000, the lowest level this year, sparked by a selling frenzy. In December 2017, it rose over $19,000.

Last year, the government surveyed India’s bitcoin exchanges and reportedly issued tax notices to investors based on their transaction histories. The Registrar of Companies (RoC), under the Ministry of Corporate Affairs, also has reportedly stopped registering cryptocurrency exchanges under the Companies Act, 2013,