Indian government embraces Blockchain but rejects cyrptocurrencies

In a budget speech today, Indian Finance Minister Arun Jaitley said the country does not recognize cryptocurrency as legal tender.  Jaitley made the comments during his fifth annual budget, which observers watched closely as the country prepares for a general election next year. Instead, he reinforced Indian government’s commitment and push for blockchain technology.

From the transcript of his speech posted online, the Arun Jaitley  said this about Blockchain: “Distributed ledger system or the block chain technology allows organization 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. The Government will explore use of block chain technology proactively for ushering in digital economy.”

India is not the only country banning the use of cryptocurrencies, on Monday, South Korea introduced legislation on new rules to stop speculative investment in cryptocurrency. South Korea wants to restrict trading to real-name bank accounts. Two weeks ago, we also reported that South Korea government is in the process of introducing a bill that will ban all cryptocurrency trading via exchanges.

However in a separate report from Reuters, when questioned by South Korea lawmakers on the government’s plans to regulate the market, the country’s finance minister, Kim Dong-yeon said

“there is no intention to ban or suppress cryptocurrency (market).”

“Regulating exchanges is (the government)’s immediate task,” Kim said.

The latest announcement comes after months of speculation over the fate of cryptocurrencies in India. “The government will now either come out with a legislative mechanism or make suitable amendment in existing legislation to ensure that dealing and trading in cryptocurrency is made illegal and to penalize entities and individuals who are involved in their trade and circulation,” said Monish Panda, founder of Monish Panda & Associates law firm. “We will have to wait and watch as to what will be the final framework of such legislation.”