India to curb cryptocurrency but embrace blockchain

India's government said it doesn't consider cryptocurrencies as legal tender and will take all measures to eliminate payments using them.

"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," Finance Minister Arun Jaitley told lawmakers in New Delhi today.

"The government will explore use of blockchain technology proactively for ushering in digital economy." Since reaching a peak of almost $20,000 in early December after the introduction of futures contracts on regulated exchanges in the US, a series of negative news has buffeted Bitcoin and rival cryptocurrencies, with losses intensifying since the start of 2018. Bitcoin's January slide knocked $44.2 billion off the $200 billion in market value generated in all of 2017, the biggest one-month loss in dollar terms in the short history of digital assets.

The South Asian nation's income tax officials had started investigations into transactions at various illegal bitcoin exchanges in December, soon after the country's central bank cautioned users about potential risks. The federal government had also set up a panel to decide on India's stand on virtual currencies, people with knowledge of the matter said on Dec. 12.

India's benchmark equity index dropped for a third day as the government proposed to revive a tax on equity investments 14 years after it was scrapped to offset revenue losses. The S&P BSE Sensex fell 0.2 per cent to 35,906.66 in Mumbai, after its best January gain since 2015. Twelve of 19 sectoral subindexes compiled by BSE Ltd declined led by a gauge of consumer goods companies. Oil & Natural Gas Corp Ltd and Sun Pharmaceutical Industries Ltd were the worst performers on the benchmark index.

"It's time to be conservative as most of the market participants are invested nearly to the fullest," said Ajay Srivastava, managing director at Dimensions Consulting Pvt. "I advise investors to keep rotating their portfolio at the right times as there will hardly be any new opportunities to make money." Profit exceeding 100,000 rupees ($1,565) from shares held for more than a year will be taxed at 10 per cent, Finance Minister Arun Jaitley told lawmakers in New Delhi.