Confusion over the legality of Bitcoin and other cryptocurrencies is at an all-time high in India after it was recently reported that the Modi government is trying to ban all cryptocurrencies in the country. So will the proposed crypto ban go ahead? Is cryptocurrency (bitcoin etc) legal in India? Will Bitcoin become illegal after the alleged ban? Can you be penalized for owning and trading digital assets? In this article, we try to clear the confusion about the legality of crypto assets in India.
Are Bitcoin, Ethereum, and Other Cryptocurrencies Legal in India?
The RBI (Reserve Bank of India) reportedly considered launching its own digital currency a few years ago. Nothing came of it, however, and many believed the central bank had abandoned the idea for good. As it turns out, however, the Indian government reportedly continues to have ambitions to launch its own digital token. Here we are going to tell you more about these plans and the status of cryptocurrencies in the country. We will also answer the burning question: is Bitcoin legal in India?
Are cryptocurrencies (Bitcoin, Ethereum, etc.) legal in India?
Bitcoin and other cryptocurrencies are in legal limbo in India and are not authorized or regulated by any government agency in the country. However, the RBI issued a guideline a few years ago instructing regulated financial institutions to abandon relationships with crypto companies. However, digital tokens are not specifically prohibited, so they are technically legal in the country. That means you can Buy, sell, own and store digital assets without breaking the law in India.
Meanwhile, the Supreme Court of India proposed in 2019 that the central government should develop guidelines to regulate cryptocurrency. Last year, the court also ruled that the unregulated status of digital assets does not make it illegal in India. For now, at least, bitcoins and other digital currencies are legal, which means you can trade, own, and store them with no legal implications. If that sounds interesting, check out our in-depth guide on how to buy and sell Bitcoin and other cryptocurrencies in India.
The government has so far found its way on this matter. The legal vacuum means that there are no rules, regulations or guidelines in place to resolve disputes that could arise when dealing with bitcoins. However, a report suggests that work on the controversial bill to regulate cryptocurrency is nearing completion and can be introduced in parliament by the end of 2021.
Controversy and confusion over upcoming legislation
The upcoming government legislative effort and lack of clarity regarding Bitcoin’s legal status only add to the confusion. A report (link above) suggests that India will soon propose a law banning all cryptocurrencies.
Quoting an unnamed government official, the report alleges that the new legislation includes provisions that “(fined) anyone who trades or even holds such digital assets in the country. The bill, one of the toughest anti-cryptocurrency policies in the world, would criminalize possession, issuance, mining, trading, and transfer of crypto assets. ”
For its part, the government has denied that it wants to completely ban blockchain and cryptocurrencies in India. At a media event last month, India’s Finance Minister Nirmala Sitharaman said: “On our part, we are very confident that we will not close all options. We will allow certain windows to experiment with blockchain, bitcoins or cryptocurrency. ”
She also recognized the benefits of blockchain technology and said that it holds great promise for fueling technological growth in the country. “Many fintech companies have made great strides. We have several presentations. There is a lot of work going on at the state level and we want to do this on a large scale in IFSC or Gift City in Gandhinagar, ”she added.
So Bitcoins are legal in India, but how long?
However, the careful formulation of Ms. Sitharaman’s rejection raises more questions than it answers. Your statements suggest this Researchers may still be able to research cryptocurrenciesHowever, it is not immediately clear whether trading Bitcoin (or any other cryptocurrency) will remain legal for regular citizens. In addition, once parliamentary sessions are over, the Treasury Department will spend more time on the upcoming bill, she added.
On the other hand, the report appears to be in line with a government announcement last January calling for a ban on private virtual currencies like Bitcoin. However, the government seems interested in creating a framework for its own digital currency along the lines of an earlier announcement by the RBI. According to Vikram Subburaj, co-founder and CEO of Giottus Cryptocurrency Exchange, reports of the RBI’s release of the digital token are welcome news for cryptocurrency enthusiasts in India.
Speaking to Republic World on the subject, Subburaj said: “It is a welcome move by RBI to work on a CBDC (Central Bank Digital Currencies). (However) it cannot be a replacement for all cryptocurrencies that deal with myriad use cases. The power of cryptos is based on their ability to have decentralized governance and to be promoted by an open source community, similar to Linux, Wikipedia or Android. In the future, CBDCs and cryptocurrencies can coexist and even complement each other. ”
So blockchain is fine, but bitcoin isn’t?
Globally, a large number of leading companies have introduced blockchain-based digital tokens in recent years. The latest addition is PayPal, which announced support for Bitcoin, Ethereum and other cryptocurrencies last October. The company announced a new service that allows customers to buy, sell, and hold Bitcoin and other digital currencies in their online wallets. You can also use digital money as a source of funding for purchases from 26 million merchants worldwide.
Even in India, the National Payments Corporation of India (NPCI) has announced a blockchain-based payment platform called “Vajra” or “Lightning”. According to the agency, the new technology will make transactions visible in real time, reducing disputes and improving back-end operations at banks. The decentralized platform will also help reduce the pain of reconciliation between all participants, it said. At the start, the Vajra project was supported by 56 private and public banks in India, including SBI, ICICI, HDFC, Citibank and HSBC.
Will the proposed legislation be a blessing or a curse for bitcoin traders in India?
Digital currencies continue to be in a legal twilight zone in India with no rules and regulations in place. While any move to regulate the sector is welcome, we hope that the proposed legislation will facilitate the proper trading of cryptocurrencies in the country rather than criminalizing such activities. Even so, many crypto enthusiasts in India find the latest report troubling. The so-called refusal by the finance minister did little to allay their fears.
Given the confusion surrounding cryptocurrencies in India, especially when they are trading at all-time highs, it will be interesting to see how things play out in the future. However, if you are trading Bitcoin, buying goods using Bitcoin, or holding other cryptocurrencies in the country, there is nothing to worry about right now. Do you buy and sell bitcoins in India? What do you think of the government’s outlook on Bitcoin? Let us know what you think in the comments below.