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Written By: Shajeeda Tajdeen
Till the pronouncement of the Union Budget a week ago, there were no specific laws in India for regulating digital currency and thus, there was ample of ambiguity about the applicability of rules and regulations to cryptocurrency. In order to curb the irregularities and to bring a proper framework in this behalf, the Government for the very first time made provisions to deal with cryptocurrency by recognizing this concept in its Union Financial Budget.
Mr. Arun Jaitely, the finance minister in his Union Budget cleared the air around the cryptocurrency. He stated that the government of India considers cryptocurrencies to be an illegal tender and shall take all the necessary steps to eliminate the use of these illegal tenders and coins. He further added that the government shall also curb the usage of crypto assets in financing illegitimate activities. However, the budget recognizes and also gives legal validity to the concept of ‘blockchain’. The stand of the government on recognizing ‘blockchain’ was that blockchain technology or distributed ledger system permits organizations of any chain of records or transactions, without any middlemen, broker or agents.
The government while terming cryptocurrencies as illegal tender, clarified its point of view that, cryptocurrencies are not currencies and they cannot be used as a medium of exchange, but that does not mean that holding bitcoins or other cryptocurrencies is illegal or banned. Till now, the government has not termed the act of possessing, holding or acquiring such cryptocurrencies as illegal. Thus, the holders or users of such currency should stride with caution.
After this decision of the government, many corporates and people from the cryptocurrency industry are of the view that both ‘blockchain’ and ‘cryptocurrencies’ are inter-related and interdependent on each other and thus, both of these should move hand in hand.
This decision of the government shall have a far-reaching effect on the digital currency industry. And many players of this game are to be affected by this new move and the Indian economy will also experience a fresh set of events after this announcement.