India’s Crypto Community Faces Another Setback. Here’s Why

After finding no mention in the Union Budget, India’s cryptocurrency players received another shock. Addressing the parliament on Monday (July 8), Minister of State for Corporate Affairs Anurag Thakur said that the government has not recognised cryptocurrencies as legal tender.

Gnanathiraviam, an MP from Tamil Nadu, sought Thakur’s response to government’s plan for cryptocurrencies.

Anurag Thakur said that the issue is under examination by an inter-ministerial committee. The government has constituted an inter-ministerial committee under the chairmanship of secretary, Department of Economic Affairs with representatives from concerned departments to study all aspects of cryptocurrencies and crypto-assets including Bitcoin.

“The Committee, with representation from MeitY, RBI, SEBI and CBDT is working to develop a framework for regulating crypto currencies. However, in the absence of a globally acceptable solution and the need to devise technically feasible solution, the Department is pursuing the matter with due caution,” he said.

The committee is examining all issues, including the pros and cons of the introduction of an official digital currency in India. No decision on licensing and authorising any entity or company to operate such schemes or deals with Bitcoins or any virtual currency has been made yet.

Thakur emphasised that it is difficult to state a specific timeline to come up with clear recommendations.

To be noted that in December 2017, the government clarified that cryptocurrencies are not legal tender and had also cautioned the public against the risks involved in investing in such currencies. Presenting the last Union Budget 2018, then finance minister Arun Jaitley had said in the parliament that the Indian government would take all measures to eliminate the use of crypto-assets in financing illegitimate activities.

The first blow for crypto startups in India came in April 2018 when the Reserve Bank of India issued a circular instructing all regulated financial services entities to exit relationships with companies and individuals dealing in virtual currencies and block all such crypto-related transactions.

Naturally, the crypto community in India has been demanding pro-crypto regulations for some time. Over the last two years, many leading exchanges such as Koinex, Zebpay, Coinome have had shut down their shops, while others such as Unocoin have had to lay off more than half of its employees.