Government to ban cryptocurrencies from its payments system

The Union Finance Ministry is planning to ban cryptocurrencies from payments system and at the same time appoint regulator to oversee unregulated exchanges that trade in crypto assets. The Dinesh Sharma committee constituted by the Government to look into issues relating to cryptocurrencies will finalise its recommendations by submiting its report in current fiscal year, ending on March 2018.

Background

In Union Budget 2018-19, finance minister Arun Jaitley had said that government does not consider cryptocurrencies legal tender and it will take all measures to eliminate use of crypto assets in financing illegitimate activities or as part of payment system. Earlier, Government had issued repeated warnings against digital currency investments, saying these were like “ponzi schemes” that offer unusually high returns to early investors.

Crypto Currencies

Crypto Currencies or Virtual Currencies are type of unregulated digital money. They are mainly decentralised peer-to-peer system, and transacted between users directly, without an intermediary. These transactions are verified by network nodes and recorded in public distributed ledger called blockchain. They are neither issued by central bank/public authority, nor is necessarily attached to fiat currency, but is used and accepted among the members of a specific virtual community. They are being transferred, stored or traded electronically. The examples of virtual currencies are Bitcoin, Litecoin, Darkcoin, Peercoin, Dogecoin, Primecoin etc.

Month: Current Affairs - February, 2018