Although Bitcoin, the king of cryptocurrencies, has evoked mixed reactions from governments and central bankers around the world, the Indian government seems to have made a decision: it may be planning to kill him with a law.
The tax department is considering a move to ban the currency, according to a report on ET Now. This will make all transactions and participations in Bitcoin and other cryptocurrencies illegal. The government believes that cryptocurrencies help tax evasion and return. The government could soon introduce a law to ban cryptocurrencies, according to the report, citing sources.
Finance Minister Arun Jaitley clarified in his budget speech that cryptocurrencies were not legal tender and that the government would not recognize them.
A group under the chairmanship of Subhash Chandra Garg, secretary of the department of economic affairs, is in the final stages of deliberation, and is expected to come up with the government’s approach across the spectrum of issues related to cryptocurrencies.
However, Jaitley had announced that the government would adopt Blockchain, the technology that supports crypto currencies.
The Reserve Bank of India (RBI) is already looking at the brave new world of cryptocurrency. The success of Bitcoin may have encouraged the central bank to consider its own cryptographic currency, since it is not comfortable with this non-fiduciary cryptographic currency.
A group of RBI experts is examining the possibility of a fiat crypto currency that would become an alternative to the Indian rupee for digital transactions.
Last year, it was reported that the government could launch its cryptocurrency, Lakshmi.
The cryptographic currency of RBI could be a part of the creation of its own Blockchain, a distributed digital ledger and technology that supports cryptographic currencies. State Bank of India has taken the initiative by bringing together lenders and technology companies to use Blockchain technology to share information among banks that will eventually help prevent fraud and address bad loans that are almost one fifth of the bank’s loan book. The SBI initiative, named Bankchain, is in partnership with IBM, Microsoft, Skylark, KPMG and 10 commercial banks.
The government had begun an offensive against cryptocurrencies a few months ago, suspecting tax evasion and ponzi schemes through cryptocurrencies. The income tax department had sent tax notices to tens of thousands of people who traded in cryptocurrencies. The notices were sent after a survey evaluated the penetration and patterns of virtual currency trading.