India Is Not Banning Cryptocurrency, Here's What It Is Doing Instead

Indian finance minister Arun Jaitley reiterated in the national budget announcement that cryptocurrency will not be accepted as legal tender in India.

It has been a tumultuous week for cryptocurrencies across the globe. While China has blocked crypto exchanges, U.S. banks are steadily declining cryptocurrency purchases. Meanwhile, Indian finance minister Arun Jaitley, during the national finance budget, stated that the country does not recognize Bitcoin as legal tender and steps would be taken to penalize crypto payments, sending cryptocurrency enthusiasts and investors in a tizzy. Shortly after the minister’s statement, the price of Bitcoin fell to a two-month low of less than $7,000.

Jaitley’s comments managed to invoke doubts in India’s crypto community again about legitimacy of trading, except this time, authorities have decided to steer the debate clear of controversy for good.

Shortly after the budget announcement, secretary of economic affairs SC Garg said that the government will set up a panel to examine trading of crypto assets in unregulated exchanges. The panel is expected to submit its findings in a report by the end of March 2018.

Ajeet Khurana, head of the Blockchain and Cryptocurrency Committee (BACC) of Internet and Mobile Association of India (IAMAI) is one among the many people in India working towards spreading awareness on cryptocurrency in India. Following the finance minister’s comments, Khurana revealed that he was happy that cryptocurrency at least found a mention in the country’s national budget. “I recognized that it was a step in the right direction. Having the finance minister say that cryptocurrency isn’t legal tender is perfectly logical –-- every nation barring Japan has taken this stance. It doesn’t mean crypto trading is illegal, but comes with its own risks like any other investment asset in the market.”

What happened after was unprecedented. Widespread coverage on media outlets seemed to indicate that the Finance Minister had stated that cryptocurrency was illegal, causing a tumult in investor circles. Since February 1 (when the national finance budget was announced), Khurana has been fielding calls to assuage harrowed investors and curious buyers of the government’s stance and the value of crypto assets!

The knee-jerk reaction to the minister’s statement and the consequent fall in Bitcoin prices could be attributed to a lack of awareness about Bitcoin itself. “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,” said Khurana.
Regardless, India’s cryptocurrency trading volumes have been on the rise. While there are no official figures, Khurana says there are at least five million active traders in India, transacting via regulated banking channels.

Bitcoin Experts Seek To Educate Indians About Cryptocurrency

With India’s leading cryptocurrency exchanges such as Zebpay, Unocoin, Coinsecure, Coinome and Bitxoxo among others reporting a marked increase in user interest every day, IAMAI has been focusing on increasing user awareness outreach programs such as educational videos and reading material, becoming one of the first industry bodies in the world to do so, said Khurana.

In addition, IAMAI is also working on putting together an online course using input from industry experts and Bitcoin exchanges as well as developing a self-assessment test. “There are multiple dimensions to Bitcoin such as the technology, security and privacy. It is important to be aware of every aspect, to understand Bitcoin better and make informed decisions while trading,” added Khurana.

Industry Joins Forces To Advocate Legitimate Cryptocurrency Usage

In a move that promotes industry collaboration, The Digital and Blockchain Foundation of India (DABFI) and the IAMAI merged in November 2017 with the aim to popularize blockchain technologies in India and build an advocacy platform for cryptocurrency in India. Several major Bitcoin exchanges in India such as Unocoin, Zebpay and Coinsecure -- also founding members of DABFI -- are now part of IAMAI’s Fintech Council.

Sandeep Goenka, cofounder of Zebpay and head of the newly formed fintech council said, “The current government is open-minded and this is a welcome change for those developing revolutionary technology. The most ideal way to strengthen the system is by using approved banking channels to onboard new customers and legitimize Bitcoin trading. The largest Bitcoin exchanges in India are already implementing these measures, and they should be standard practice.”