The Indian government is to ban the use of Bitcoin and other cryptocurrencies for payments, finance minister Arun Jaitley has announced, kicking Bitcoin’s already-sliding value further down the slope.
At the same time, Jaitley indicated that the government has a different attitude toward the blockchain technology that underpins cryptocurrencies and can be used for a variety of other purposes.
“The Government does not consider cryptocurrencies 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,” Jaitley said Thursday in his 2018 budget speech. “The Government will explore use of block chain technology proactively for ushering in digital economy.”
The news likely contributed to a 6.5% drop in Bitcoin’s value over the last 24 hours, leaving the most popular virtual coin at the $9,625 mark.
Bitcoin, which briefly neared $20,000 in early December, has had a dreadful time since then, partly thanks to regulatory moves against it in South Korea. Its slide made cryptocurrency investors $44.2 billion poorer in January alone.
The Indian finance minister pronouncement does at least clear up the government’s intentions regarding Bitcoin. It started probing illegal exchanges in December, and also established a panel to work out new policies.
The distributed-ledger technology known as blockchain, however, is becoming increasingly popular with policy makers as it promises great efficiency and security for things like land registries. Indian states started examining that potential last year.
Update: At least one Indian bitcoin wallet provider, Unocoin, believes Jaitley’s words have been misinterpreted:
Based on the #UnionBudget2018 announcement, there is no change in government's stance with respect to #cryptocurrency. It is business-as-usual at @Unocoin#Budget2018pic.twitter.com/YGUFOlfhCj
— Unocoin: India’s Bitcoin & Crypto Exchange (@Unocoin) February 1, 2018