February 1, 2018

Priyanka Pani/Abhishek Law The bitcoin party seems to be over for Indian investors. With the Centre terming cryptocurrency as an illegal tender, market players are now expecting a legislation that would make the rules clear.

“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,” Jaitley said.

Question of legality

However, market players said that the Centre’s position is ambiguous since it was never a legal tender anyway.

“People are not allowed to pay for services or products through these digital currencies in India,” said Vivek Sancheti, a Rajkot-based tech entrepreneur and a cryptocurrency investor, adding that the clarity will come in the next two-three days.

Several traders that BusinessLine spoke to were of the view that they are expecting some more clarity on whether trading in crypto-currency is allowed or whether it would be treated as a commodity.

On Thursday, bitcoin dipped below $4,000 as people started pulling out their investments frantically, however, by end of the day Bitcoin recovered $9,512 levels.

‘Bring regulation’

“The intention is more likely to regulate the circulation to avoid its usage for illegal transactions. In addition, the government has recognised the viability of block chain technology that powers cryptocurrency.

“Efforts should be made to bring in regulations at the earliest to achieve this aim,” said Rashmi Deshpande, Associate Partner, Khaitan and Co.

Indian players such a Zebpay and Unocoin did not issue any cautionary statements in this regard to their customers. In fact, the trading activity was as usual on the platforms.

Blockchain and crypto experts were also of the view that a blanket crackdown on bitcoins would end up wiping out many honest punters and boost illegal trade, which would be difficult to track.

“The government will now either come out with a legislative mechanism or make suitable amendment in existing legislation to ensure that dealing and trading in cryptocurrency is made illegal and to penalise entities and individuals who are involved in their trade and circulation,” said Monish Panda, founder of Monish Panda & Associates law firm.

“We will have to wait and watch as to what will be the final framework of such legislation,” he added.

[The Hindu Business Line]