Are cryptocurrencies illegal in India?

Bitcoin stack with a national flag in the background

 

Over the last few months, there has been an increased regulatory presence in the virtual currency space in India. We have seen tax officials send out notices to cryptocurrency holders and traders to collect capital gains taxes and as of February 1, 2018, Arun Jaitley, India’s Finance Minister has decreed cryptocurrencies inapplicable for use as legal tender.

Upon announcing the highlights of the 2018 budget, Jaitley was quoted to have said, “The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,”.

This latest news has caused the value of bitcoin (BTC) to drop roughly 11%, marking an extended tough period for cryptocurrencies, altcoins or otherwise. An especially rough outcome for BTC’s favourite holder-country, India. Indeed, one in every 10 BTC transactions takes place in India and transactions are predominantly supported by Unocoin, the largest storage and trading wallet solution for BTC in India, which just passed a million users and is now going multi-platform.

This drop in value for BTC could well be premature, caused by the media’s misrepresentation of facts as they were delivered in Jaitley’s speech earlier today. To be sure, Jaitley has eliminated cryptocurrencies for use as legal tender and illegal activities. However, there has been no apparent ban on the trading of cryptocurrencies.

Unocoin’s team takes a neutral stance on Jaitley’s statement/Union Budget for 2018 and their recent tweet exemplifies this:

Even with the denouncement of cryptocurrencies for day-to-day and/or criminal activities, it appears that the Indian government is very bullish on the possibilities that await, with the continued implementation of blockchain technology. “The government will explore use of blockchain technology proactively for ushering in the digital economy,” Jaitley said in his speech.

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