Shortly after Arun Jaitley announced in February’s national finance budget that India does not recognize Bitcoin as legal tender and that measures would soon be in place to penalize crypto payments, its price fell to a two-month low of less than $7,000.
But just as soon as this announcement had been made the Secretary of Economic Affairs SC Garg countered with the news that a panel was to be set up to examine trading of crypto assets in unregulated exchanges and whose findings are expected to be released in a report later in the year.
It’s not just about Bitcoin
Although primarily focusing on Bitcoin this is a matter that applies to many of the other fast emerging cryptocurrencies like Ethereum and Monero too, each with their own particular strengths and unique qualities. For example, the former is intended to be a building block for the development of decentralized apps while the latter is said to be the most secure and confidential cryptocurrency yet invented. This is why it's argued Monero is better for gambling than Bitcoin and more and more online casinos are expected to start welcoming it as a payment method.
Of course, it’s no real surprise that the government should be expressing caution about Bitcoin and cryptocurrencies in general as they are simply following the lead of others from around the world. These include China who have banned them altogether and others such as Canada whose Central Bank chief has described trading in Bitcoin as being no better than gambling. Certainly, the volatility shown by its sudden drop in value following Arun Jaitley’s announcement in February does lend weight to this opinion.
Spreading the word
However, there are many in India who want to dispel these opinions including Ajeet Khurana, head of the Blockchain and Cryptocurrency Committee of the Internet and Mobile Association of India (IAMAI). After the finance minister’s pronouncement, Khurana said that he was happy that at least cryptocurrency had been mentioned in the context of the budget. However, he saw firsthand the disquiet it had caused as he received many calls from cryptocurrency investors who were worried that their actions may soon be deemed illegal as well as potential buyers looking for advice.
Khurana believes that a lack of knowledge about the subject was partly to blame for this. He explains, “Right now, the general understanding of the term Bitcoin in India is vague. There are a lot of people in India who are intrigued by the technology but don’t understand it well enough.”
Nevertheless, the country’s cryptocurrency trading volumes continue to rise with an estimated five million active traders using exchanges including Zebpay, Unocoin, Coinsecure, Coinome and Bitxoxo. In the light of this interest, IAMAI has been focusing on producing a range of educational materials and online courses to help eliminate confusion and spread knowledge.
So hopefully both the government and potential cryptocurrency users and traders will soon both have a far clearer vision of what is undoubtedly one of the most important financial and technological breakthroughs of the 21st century so far.