Government terms cryptocurrencies illegal

Indian government does not consider crypto-currencies, the demand for which is rising globally, a legal tender and will take all measures to eliminate its use in financing, what the finance minister called, "illegitimate activities".

However, it will explore the use of block chain technology – the underlining technology of Bitcoins and other online currencies - proactively for ushering in digital economy.

''The distributed ledger system or the block chain technology allows organisation of any chain of records or transactions without the need of intermediaries. The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,'' finance minister Arun Jaitley said in his Budget speech.

''The government will explore use of Blockchain technology proactively for ushering in digital economy,'' he added.

''The RBI has shown significant interest in Blockchain with a number of  proof-of-concept (PoCs), including the whitepaper we did with the IDRBT and major banks. RBI will continue to pursue Blockchain solutions to improve interoperability and reduce friction in digitisation,'' said Jesse Chenard, Co-Founder and CEO of MonetaGo.

New York-headquartered MonetaGo works with financial institutions and central banks around the world to provide private permissioned blockchain and distributed ledger technology solutions for supply chain financing and fraud prevention.

''In 2018, more banks are seeking to use this technology to transform parts of their business, especially to reduce frauds,'' he said, adding, governments of Andhra Pradesh and Telangana have already embraced the possibilities of blockchain by testing it for land deals."

''We are yet to match the security measures implemented in developed countries, hence the decision to eliminate the use of cryptocurrencies and encourage the use if blockchain in payments sector is definitely a wise decision by the government. Although several banks have started adopting blockchain technology within their existing infrastructure, it will be note-worthy to see how this tech implementation is going to shape up the financial inclusion of the country,'' Manav Jeet, MD & CEO at Rubique said.