Cryptocurrency is not legal tender in India says Union Finance Minister Arun Jaitley

The Central government is considering setting up a committee under the chairmanship of Secretary, Department of Economic Affairs, to look into the issues surrounding cryptocurrency, Jaitley said, according to media reports.

In an earlier release, the Central government had issued a warning to those investing in cryptocurrency.

"There has been a phenomenal increase in recent times in the price of Virtual Currencies (VCs), including Bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets. The price of Bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices.There is a real and heightened risk of investment bubble ... which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money."

Unlike regular currency, cryptocurrency is not issued by the central bank of a country. Rather, it is a generated through complex codes or 'blockchain' technology by 'miners'. Bitcoin is one of the most popular cryptocurrencies. Other popular cryptocurrencies include Ether, Bitcoin cash, Ripple, etc.

The main reason behind the popularity of any cryptocurrency is the anonymity and secrecy involved, a feature which has been used to advantage for money laundering and other nefarious activities, according to reports.

However, the significant incredible returns that investment in Bitcoin has delivered in 2017 -- with a rise of over 1,400 per cent -- has fuelled a lot of trading interest, according to media reports.

There are an estimated 150,000 domestic traders in India, the Business Standard said in a recent report.

Interestingly, the number of bitcoins generated is set to decrease geometrically, according to miners; it has been reported that the number of bitcoins in existence is not expected to exceed 21 million.

Meanwhile, other countries have reacted variously to cryptocurrency.

For example, Malaysia's Finance Minister II, Johari Abdul Ghani, was quoted by The Malaysian Reserve as saying, "Monetary authority is taking a cautious approach with digital currencies including bitcoin to ensure safety measures are in place to protect the interest of the public."

“It is not the intention of the authorities to ban or put a stop on any innovation that is perceived to be beneficial to the public,” he said.

In the US, in December,  a  regulator said it is allowing two traditional exchanges to trade in Bitcoin-related financial contracts.

The CME Group and CBOE Global Markets exchanges began offering investors Bitcoin futures from Dec last.