With Finance Minister Arun Jaitley announcing that virtual currencies are no legal tender and that the proliferation of its use for illegitimate financing will be curbed, industry experts urged him to regulate, not curb, cryptocurrencies. “Cryptocurrencies are no legal tender and the government discourages its use. However, the government will look at the utilisation of Blockchain (a distributed digital technology that supports cryptocurrencies),” Jaitley said in his Budget speech in Parliament. Bipin Preet Singh, Co-founder of e-wallet MobiKwik, said that “the government should consider regulating cryptocurrencies than curbing their use entirely”.
Neither the government nor the Reserve Bank of India (RBI) has authorized any virtual currency as a medium of exchange till date but the momentum for such virtual currencies is catching up rapidly in India like other countries. “The announcement on the cryptocurrency should not be misinterpreted. The intention is more likely to regulate the circulation to avoid its use for illegal transactions,” noted Rashmi Deshpande, Associate Partner, Khaitan & Co, a leading law firm. “In addition, the government has recognised the viability of blockchain technology that powers cryptocurrency. Efforts should be made to bring in regulations at the earliest to achieve this aim,” Deshpande added.
According to Sapan Gupta, National Practice Head-Banking & Finance at law firm Shardul Amarchand Mangaldas, capitalizing on the Blockchain technology could open new ways of securing peer-to-peer lending transactions, boosting trade finance, fintech and information repository sectors. “By segregating the use of Blockchain from cryptocurrencies reflects the government’s intention to use the technology in a gradual and safer manner, before it gets into concepts like replacing currencies,” Gupta said.
D.D. Mishra, Research Director at Gartner, said that rather than restricting cryptocurrencies, they can be regulated to prevent any adverse impact and risks while exploring Blockchain side by side. “It is a clear indication of how important and widespread this technological innovation has become in India. BACC welcomes the statement and reaffirms its unstinting assistance to the government, and all regulators, in helping evolve a robust ecosystem for cryptocurrencies,” said Ajeet Khurana, Head, The Blockchain and Cryptocurrency Committee of India (BACC).