Legal Status of Cryptocurrency under New Budget

Finance Minister Arun Jaitely has very clearly laid down the stand of the Indian Government on Cryptocurrency and Blockchain in the Union Budget 2018. Contrary to what the news articles are claiming, in my opinion Cryptocurrency is not banned.                                                                                   The Government has only maintained its earlier stand that "Cryptocurrency is not legal tender in India" which is nothing new and was already declared over a month back and even before that. This just means that Cryptocurrency is not recognised in India to undertake commercial transactions which means sale and purchase of goods and services. In simple words Legal tender is any official medium of payment recognized by law which can be used to extinguish a public or private debt, or meet any financial obligation. So it means that Cryptocurrencies cannot be used for clearing any debt or financial transaction in India. An indivisual holding Cryptocurrency can use them in any other country where it is legal tender. Also, currently people exchanging one cryptocurrency for another cryptocurrency cannot be held liable as this is mere barter transaction. You cannot buy things with Cryptocurrencies but he clear term "Ban" is no where used in the Budget.

The Governent has stated in the Budget that it will crack down on illegal transactions which are happening through Cryptocurrency. There is non-compliance of FEMA in cross-border cryptocurrency transactions, but it cannot be classified as violation too as cryptocurrency is not yet covered in FEMA. Clearly, there is a need for a proper regulatory framework or clear ban of Cryptocurrencies.

The Government has also stated that it will harness Blockchain Technology for the Digital India Movement clearly according this technology a legitimate status.

To summarise, Cryptocurrency is not legal tender though not banned as yet and Blockchain technology can be freely used to develop applications.





Feb 03, 2018

Author By Advocate Puneet Bhasin

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