India’s Finance Minister, Arun Jaitley, has publicly spoken against bitcoin acceptance as a legal tender in the country, on Tuesday.
The high ranking official referenced a similar stance taken by India’s Central Bank.
Jaitley added that 11 cryptocurrency exchanges have been identified in India. Last month, Indian income-tax authorities visited several bitcoin exchanges to conduct ‘survey operations’ on suspicion of alleged tax evasion. Despite a Supreme Court plea to “regulate the flow of bitcoin” and introduce a legal framework for digital coins, “the government will not take knee-jerk decisions on cryptocurrencies”, Jaitley said.
A government panel is currently waiting for a detailed report on tackling cryptocurrencies in India, the Finance Minister said.
“Recommendations are being worked at. The government’s position is clear, we don’t recognize this as legal currency as of now,” Jaitley said.
In a public warning on December 29, Arun Jaitley compared cryptocurrencies to ponzi schemes, claiming they lack intrinsic value and aren’t backed by any assets.
“The VCs [note: virtual coins] don’t have any intrinsic value and are not backed by any kind of assets. The price of Bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices. 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. VCs are stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack etc. which may also result in permanent loss of money. As transactions of VCs are encrypted they are also likely being used to carry out illegal/subversive activities, such as, terror-funding, smuggling, drug trafficking and other money-laundering Acts,” the government notice read.
Indian Finance Minister, Arun Jaitley – Image source: financialexpress.com