Finance Minister Referred IAMAI's Blockchain and Cryptocurrency Recomendations

The Blockchain and Cryptocurrency Committee (BACC) of the Internet and Mobile Association of India (IAMAI) is happy that the Finance Minister has recognized the importance and popularity of cryptocurrency, and has chosen to talk about it on budget day. As far as the exact content of what he said, we are neutral-to-positive about it. However, we are pained to see his words being misinterpreted and misreported. Hence we are issuing this clarification, as well as our position.

Mr. Arun Jaitley, Finance Minister of India said, ‘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.’

Looking closely that means:

(i) Cryptocurrencies are not legal tender or coin

(ii) The Government will take all measures to eliminate use of these crypto-assets in financing illegitimate activities

(iii) The Government will take all measures to eliminate use of these crypto-assets as part of the payment system

Here is what we understand, and where we stand on all of these:

(i) During question hour in Rajya Sabha on Jan 2, 2018, the Finance Minister had made the exact same point, where he stated that, ‘bitcoins or such cryptocurrencies are not legal tender’. This has been the position taken by almost all Governments around the world, and we regard this statement quite neutrally. It is our understanding that only currency notes and coins are legal tender. That doesn't make any comment on the ‘illegality’ of other assets. It must be emphasized that gold, stocks, bonds, and other such assets are also not ‘legal tender’. To extrapolate that to mean that such assets are ‘illegal’ is irresponsible.

(ii) Every citizen and business in this country should play their role in eliminating financing of illegitimate activities, regardless of whether such financing is done using legal tender, cryptocurrency, gold, or any other medium. We welcome this move by the Government, and want to wholeheartedly support the Government in this move. Our members already maintain a no-compromise approach to KYC (know your customer) and AML (anti money laundering) processes. We encourage the Government to work with our members, as we are committed to detect, report, and eliminate suspicious transactions in pretty much the same way as other institutions do. This will also generate confidence in our banking partners.

(iii) We understand the Government's position in wanting to eliminate the use of crypto-assets as part of the payment system. Since we are committed to support every regulation that the Government brings in, we will work with the Government to help it achieve its stated objective.

When a platform as significant as the Union Budget speech mentions cryptocurrencies, it is clear that the sector is coming of age. We welcome this positive development, and see it as an important milestone in the journey to policy-clarity and consumer-education.

The Blockchain and Cryptocurrency Committee of India (BACC) is formed under the Internet and Mobile Association of India (IAMAI). Most of the leading cryptocurrency exchanges are members of the BACC. It is an advocate of digital financial innovation and works with different stakeholders in the Government and industry bodies. BACC is organizing itself as a Self-Regulated Organization (SRO) and promotes best practices in transparency, customer education and protection.