Budget 2018: Arun Jaitley says cryptocurrency is not legal tender, government will discourage its use

Q16. It is a blockchain-based cryptocurrency that works in a similar way to Ethereum and bitcoin. It is a peer-to-peer internet currency that allows for instant, near-zero cost payments to anyone in the world. It’s a decentralised payment network that isn’t managed by any central authorities. What is it known as?

In a move to regulate the cryptocurrency market in India, Finance Minister Arun Jaitley today cleared that it is not legal tender and it will discourage its use.

However, he mentioned that the government will look at the utilisation of blockchain technology.

During the run-up to the budget, there have been talks that the government could come out with a roadmap to regulate the cryptocurrency market. There has been rising craze among investors to put in their hard-earned money into the highly volatile cryptocurrency market setting off alarm bells in the government.

Even before the budget Jaitley had already said that the Cryptocurrency is not legal tender in India.

There have been reports that several banks have frozen account cryptocurrency exchanges in India, while the registrar of companies (ROC) has stopped registering companies intending to act as such exchanges.

There have also been fears that devious fly-by-night operators would take advantage of the greed among those looking for quick, short term gains and disappear after collect money, causing headache for the government.

Also, there are fears that those with black money, such as the underworld, could be using the cryptocurrency route to invest their tainted money to register gains.

Digital currency, led by the Bitcoin, which has been the most popular among the plethora of options, has gained immense popularity globally. However, the underlying assets have been highly volatile with price movements swinging wildly on news flow.

Globally, there has been a move to clamp down on crypto trading, with countries such as South Korea banning anonymous trade in such currency.

There have also been issues on safety of investors’ accounts against hackers. There have been several instances where accounts of investors have been hacked into by criminal elements who have fled with investor wealth. Currently, there is no way to retrieve such money lost to hackers.