India Remains Uncertain on the Legality of Cryptocurrency in the Country

The Indian Government has repeatedly issued warnings signals and concert regarding Bitcoin and other cryptocurrencies. Last week, in a press statement, the Ministry of Finance talked about Virtual Currencies (VCs) saying “VCs are not currencies. These are also being described as ‘coins’. There is however no physical attribute to these coins. Therefore, VCs are neither currencies nor coins.”

So far there have been hazy indications from the government regarding how India’s Central Banks – Reserve Bank of India – perceives Bitcoin and other cryptocurrencies. Clearing a bit of the air, the government issued a statement saying that the virtual currencies are not backed by the government fiat. “These are also not legal tender. The government or Reserve Bank of India (RBI) has not authorized any VCs as a medium of exchange.”

“Bitcoin Not Legal Tender in India” – Says Finance Minister of India.

The RBI has issued multiple warnings in the past regarding the trading of cryptocurrencies. The Finance Ministry has recently asked crypto enthusiasts and investors to remain extremely cautious about putting their money in such “Ponzi schemes”.

Finance Minister Arun Jaitley said in a statement: “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.”

One of the members of the Indian Parliament – Ajay Mishra has recently demanded that “the government should make a network capable of monitoring the bitcoin currency.” Finance Minister Arun Jaitley has also clarified that the government “The government is examining the matter. A Committee under the chairmanship of the Economic Affairs Department Secretary is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken… Instead of taking any knee-jerk action, let’s wait for the report of this committee.”

Moreover, the government has also issued a notice that all those cryptocurrency investors who have minted hefty profits from their crypto investments will need to pay Capital Gains Tax to the government.

Despite several warnings issued by the government, Indians in huge number are flocking their wings to crypto exchanges. The rush of investors to open their crypto accounts has been at an all-time high recently. Local newspaper Times of India reported that “The cryptocurrency craze has increased so much that there is a long waiting for registration.”

India’s leading cryptocurrency exchange Unocoin said that just a 1000 customers registered were registered to trade on the exchange in December 2016. This number increases to adding an average 10,000 customers a day in December 2017.

Another local exchange Coinsecure is also experiencing a huge rush. The exchange recently posted a notice on its website stating “we have a huge backlog on KYC’s so please expect a delay of over 10 days before we contact you.”

As the winds are moving in opposite direction between investors and the government, it remains to be seen what action further will be taken in this matter.