Bitcoin No More, But Budget 2018-19 Gives New Life to Blockchain Technology
India is a home to a large number of bitcoin traders and investors. There are approximately five million active cryptocurrency traders in India transacting via regulated banking channels. One in every 10 bitcoin transactions in the world takes place in India.
In the Budget 2018-19 speech Indian finance minister clearly denied use of cryptocurrencies as a legal tender and even stated that the government will ensure elimination of bitcoin and other cryptoassets in India. The finance ministry earlier termed cryptocurrencies as a Ponzi scheme that is unsafe for investors and can result in sudden and continual crash exposing investors, especially retail investors losing all their hard-earned money. Government does not recognize cryptocurrencies as a legal tender and will instead reassure use of blockchain technology in payment systems.
Referring to blockchain technology the finance minister said that a “distributed ledger system or the blockchain technology allows organization of any chain of records or transactions, without the need of intermediaries. The government will explore use of blockchain technology proactively for ushering in digital economy.”
Lack of Awareness Among Indians About Cryptocurrency
Despite large number of active traders in India, the retail investors are not educated and aware about the cryptocurrencies and that resulted in a fall-in prices as a reaction to minister’s statement. Currently, people have a vague understanding about bitcoins and other virtual currencies. There are lot of people who are fascinated by this technology but actually don’t understand it.
The ministry through this declaration was focusing on the exchange’s responsibility towards increasing awareness among investors about cryptocurrency and its technology. India’s leading cryptocurrency exchanges are getting a good response from users and reporting an increase in user interest every day.
Future of Cryptocurrency in India: Wait & Watch
The declaration comes after months of speculation over the fate of cryptocurrencies. Just like India every other nation has taken this stance except Japan.
Since there are lot of small and unreliable cryptocurrency exchanges in India, there is a need to for a legislative mechanism to ensure that trading in cryptocurrency is made illegal and to penalize entities and individuals involved in their trade and circulation.
Cryptocurrency Industry believes that blockchain and cryptocurrencies go hand in hand. Leading cryptocurrency exchanges are in a view that government should strengthen the system by using approved banking channels to onboard new customers and legitimize Bitcoin trading.
Cryptocurrency exchanges are not happy with the government’s stance on cryptocurrencies and the wait and watch approach as of now. The government has not made a clear policy or issued a guideline with regard to which will add some more regulation in the market. It has just stated them that it is not a valid currency but has not commented on whether it would be illegal or banned. For an individual investor it is advised to trade with caution as the industry is highly volatile with prices.
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Vidya Ratan: Bachelor of Business Studies (Finance) graduate from SSCBS, DU. The views
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