Is cryptocurrency trading legal in India
If we turn our face and look around, we will get to know that the world is discussing cryptocurrencies, and blockchain technologies. Not only this, the global people are rapidly adapting and owning the cryptos at its pace.
However, investing or trading in assets like cryptocurrencies is a relatively new concept, and many people are still unsure about the legal status of cryptocurrency in their country. In this blog post, we will discuss whether investing in cryptocurrency is legal in India.
In case you are not familiar with cryptocurrencies, it is a type of digital currency or asset which is gaining enlightenment, and booming all around the world. The first and foremost well-known cryptocurrency, Bitcoin, was coined in 2009, and since then, many other cryptocurrencies have been developed. Foremost reason of bitcoin and altcoin rise is due to its decentralised nature, which means that it is not controlled by a central authority, such as a government or a bank.
This gives people greater control over their money and allows for fast and secure transactions without the need for intermediaries. In recent years, the value of cryptocurrencies among people has skyrocketed, making it a lucrative investment opportunity for many. However, the digital virtual assets like cryptocurrencies have always remained the topic of debate and discussion since its introduction. It is so because the legal status of cryptocurrencies varies from country to country, and whereas investors are advised to exercise caution while investing in this market. Alike with cryptocurrencies specifically, there are many countries which are in favour of it whereas other countries don’t consider it as legal tender.
In India, the legal status of cryptocurrency is a bit murky. It is so because the Reserve Bank of India (RBI) recently issued a circular in April 2018 which stated that banks and other regulated entities cannot deal with cryptocurrencies. The circular also prohibited banks from providing services to any individual or business dealing in virtual digital assets like cryptocurrencies. This move by the RBI had a significant impact on the cryptocurrency market in India, and it caused a lot of uncertainty among investors.
However, in March 2020, the Supreme Court of India overturned the RBI’s circular and declared it unconstitutional. The court mentioned that the RBI did not have the power to ban cryptocurrency trading and that the circular was in violation of the Constitution of India. The court also stated that cryptocurrencies are not illegal in India, and the government should take steps to regulate the market. The Supreme Court also stated that there is no such legal law that bans people from trading in cryptocurrencies.
Though even after the Supreme Court’s verdict, the government of India has not taken any concrete steps to regulate the cryptocurrency market. However, it is worth noting that there have been some recent developments that suggest that the government is considering regulating cryptocurrency.
Let's see what are the possible causes that indicate that the Indian government sees Virtual Digital Assets like cryptocurrencies as a regulatory trading project
In January 2021, the Indian government introduced the Cryptocurrency and Regulation of Official Digital Currency Bill. The bill proposes to create a framework for the issuance and regulation of digital currencies in India. The bill also seeks to ban all private cryptocurrencies, including Bitcoin, and to create a digital currency issued by the Reserve Bank of India.
The bill has not yet been passed into law, and it is still in the draft stage. It is important to note that the bill proposes to ban private cryptocurrencies, not to ban cryptocurrency trading altogether. If the bill is passed into law, it would mean that only digital currencies issued by the government would be allowed in India. This move by the government is aimed at creating a more stable and secure digital currency environment in the country.
Recently, 1% TDS rate is supposed to be imposed on cryptocurrencies in Indian demography. Also in the meantime, there are no specific laws that prohibit the buying or selling of cryptocurrencies in India. However, investors should exercise caution while investing in cryptocurrency as the market is unregulated, and there is a risk of losing their investments.
It is also worth noting that cryptocurrency trading is not considered as a complete legal tender in India yet so far. This means that cryptocurrencies cannot be used as a medium of exchange for goods and services. The government has not yet given any clarity on how cryptocurrencies will be taxed in India. They will likely be treated as capital gains and taxed accordingly.
In conclusion, investing in cryptocurrency is not illegal in India. The Supreme Court of India has declared that cryptocurrencies are not illegal, and the government has not yet passed any laws prohibiting cryptocurrency trading.
However, the market is unregulated, and investing in cryptocurrencies is subject to market risks. Also, investors should exercise caution while investing in cryptocurrency. Furthermore, as per various reports and sources, the Indian government is considering regulating the market, so investors should keep an eye on the developments in this regard.
By Riteshu Sen Jaiswar