Looking through the flurry of articles covering the Union Budget earlier today, most of the reputed journals have misconstrued not just the words but the intention of the government regarding cryptocurrencies.
I’m going to keep this article short, and point out some basic facts regarding cryptocurrency in India as well shed some light on the (dismal state of) journalism surrounding it.
First, the only crypto related words that are part of this year’s budget, straight from the transcript:
Distributed ledger system or the block chain technology allows
organization of any chain of records or transactions without the need of
intermediaries. The Government does not consider crypto-currencies legal
tender or coin and will take all measures to eliminate use of these cryptoassets
in financing illegitimate activities or as part of the payment system. The Government will explore use of block chain technology proactively for
ushering in digital economy.
Not Being Legal Tender Does Not Equal ‘Illegal’
No country in the world considers Bitcoin “legal tender”, and neither does India. Even Japan, a country where Bitcoin and cryptocurrencies has been declared as a means of payment, has not made Bitcoin legal tender. To be legal tender, a currency has to be backed by the government. World of Warcraft gold, tulips and the US dollar aren’t backed by the RBI either, and neither is Bitcoin. That’s all the statement means.
In fact, various Indian government figures, including Finance Minister Arun Jaitley, have previously said the exact same thing, using the same clear language: Bitcoin isn’t legal tender.
The second part of the statement deals with curbing illegitimate activities such as money laundering and terrorist financing. The government has a history of cautioning citizens against the dangers of cryptocurrency.
The incorrect way to interpret Mr. Jaitley’s statement: Bitcoin is banned in India.
The correct way to interpret Mr. Jaitley’s statement: Bitcoin cannot be used as legal tender and cannot be used for illegal activities.
The Indian Media Doesn’t Understand Cryptocurrency at All
According to livement, cryptocurrencies are now outlawed. Hindustan Times claims in their title, “government to eliminate their [cryptocurrencies’] use”, which is the exact opposite of what the statement says. Indianexpress has decided that cryptos are now illegal (and “will remain illegal” according to the article, implying it already was). Only financialexpress tried to objectively portray the words, but you can see why the average person in India would have trouble distinguishing between whether it’s legal or not.
A few hours later, international journals like CNN and Forbes started to run with the story as well. Oh, and Bitcoin’s price tanked by 8%. Cointelegraph, one of the few cryptocurrency publishers I read a lot, has the most insightful article so far.
Local exchanges such as Zebpay and Unocoin have attempted to clarify this as well:
Wrong interpretation: Bitcoin is illegal.
Correct interpretation: Bitcoin cannot be used as legal tender. Bitcoin cannot be used for illegitimate activities.
— zebpay (@zebpay) February 1, 2018
— Unocoin (@Unocoin) February 1, 2018