Bitcoins Not Legal Tender: Jaitley Warns Investors

There is no mechanism to prevent the misuse of cryptocurrencies such as Bitcoin by terror groups, Jaitley said.

Bitcoins or such cryptocurrencies are not legal tender and those indulging in such transactions are doing it at their own risk, Finance Minister Arun Jaitley said on Tuesday, 2 January, as MPs expressed concern over trading on these platforms.

During the Question Hour in Rajya Sabha, DMK member Kanimozhi sought to know whether the government was considering regulating cryptocurrencies like Bitcoin and Ethereum, as India "accounts for more than 11 percent" of such trade globally.

Jaitley emphasised that the Centre's consistent position was that such currencies were not legal tender.

"The government is examining the matter. A committee under the chairmanship of secretary, department of economic affairs, is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken," he said.

While a repeated message was being given that such currencies were not legal tender, more detailed steps would be taken once the report of the committee is submitted, he said.

There is no mechanism to prevent the misuse of cryptocurrencies such as Bitcoin by terror groups and other anti-national elements, the government said.

One of the features of cryptocurrency is that there is lack of dependence on the state. It functions with a degree of anonymity. It operates within a virtual community which is created and enjoys the trust of that virtual community. The government is examining the matter. A committee under the chairmanship of the Economic Affairs Department Secretary is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken... Instead of taking any knee-jerk action, let’s wait for the report of this committee.

Arun Jaitley, Finance Minister

He said there were 785 different types of cryptocurrencies operating worldwide.

Independent member Amar Singh wanted to know what action was being taken in regard to the names which have figured in the Panama papers and Paradise papers, even as trading in bitcoins was also going on.

Jaitley said that the government was acting as per the law in these matters.