No currency status for Bitcoin in India

One of the main aims of cryptocurrencies is to become decentralized mediums of exchange to facilitate payments all over the world. Even though its mainstream adoption is on the rise, the crypto industry still has its cynics.

A major roadblock to fulfilling this goal is not being recognized as a currency in the first place. Bitcoin faces this very issue, with India’s government categorically stating that the crypto is not seen as legal tender in the country.

India’s finance minister, Arun Jaitley, stated this during a recent parliamentary session. Not only did he confirm Bitcoin’s non-currency status, he also advised that the country’s central bank was of the same view.

Even so, the popularity of digital currencies is steadily increasing in the country, leading India’s government to work on developing and implementing regulations for trading. Jaitley previously touched on this last month by stating:

“Recommendations are being worked at. The government’s position is clear, we don’t recognize this as legal currency as of now.”

Last month, the country’s Income Tax (IT) department investigated a minimum of nine Bitcoin exchanges for tax evasion. The agency then advised that they would issue notices to Bitcoin holders for the imposition of capital gains taxes Jaitley has said that the government had singled out 11 crypto exchanges. However, he did not give any reasons as to why they were identified, or if any investigations would be undertaken.

Some authorities have requested that a sense of urgency be applied to regulation proceedings. The Indian Supreme Court had previously formally requested that the Finance, Law and Justice and Information Technology ministries provide clarity on Bitcoin trading in the country.

However, Jaitley responded that the government would not have “knee-jerk reactions” in response to requests for regulations. He added that research is currently being conducted by an interdisciplinary committee, which includes the country’s central bank, to determine the best course of action.

The lack of regulations has not stopped the government from issuing warnings to its citizens though. The Finance Ministry has even gone as far as comparing cryptocurrencies to ponzi schemes:

“There is a real and heightened risk of investment bubble of the type seen in ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such ponzi schemes.”

Even with the negativity surrounding Bitcoin in the country, the demand for it as higher than ever, which has previously resulted in its price being 20% more than the global average.