Is Bitcoin legal in India?
The legal status of cryptocurrency is in the grey zone. Is Bitcoin legal in India is a question on everyone’s mind. For some people it’s a shady business while others wish to invest in it but are unaware of its legalities. In order to understand the current legal status we have to go back to where the whole debate started.
Bitcoin- mother of all crypto currencies is also the most popular one of its kind. There are many others like Ethereum, litecoin, dogecoin, etc so the following information applies to all forms of crypto. The biggest advantage of crypto currency is de-centralization. Which basically means taking away financial power form the government/ banks and giving it back to the public. Banks just keep 4% of all the deposits and we have even seen many going bankrupt. Keeping that in mind we all want to be in charge of our money. This is why bitcoins and other forms of digital currencies became lucrative investments. The neutral and independent nature of bitcoins is seen as a major threat by the banks.
To answer your question, YES, bitcions, as of today are legal in India but with that being said currently there are no laws pertaining to it, hence, the grey zone. This debate has been going on for years and we see constant changes along with new developments. So to answer your query in detail I shall take you back to 2018 where it all began.
Year 2018 – RBI Ban
In 2018 the Reserve Bank Of India announced a circular. Instructing all banks not to lend financial assistance to those dealing in any form of cryptocurrency. Since the government had no control over it. This was seen as clear ban on crypto.
Response to the ban
When this circular was announced many crypto exchange agencies knocked at the supreme courts door. Crypto- coins and bitcoins seen as the 2nd biggest trend of 21st century. Despite its volatility it possess multiple benefits. There is no central authority or middle men, no currency issues, it’s both a medium of exchange and investment and identity of investor/ trader remains anonymous. In Feb, 2019 the government proposed a bill to ban all crypto assets in India. They also suggested a term of 10 years in jail plus heavy penalty to be applied as well. When it comes to Digital currency no laws exist at the moment.
Year 2020- Supreme Court Judgement
In March 2020, the Supreme Court of India removed the RBI ban making cryptocurrency legal again. The RBI crypto circular was challenged. As it violated a fundamental right our constitution guarantees. Article 19(1) (g) of the Constitution of India gives us the right to practice any profession/occupation, business and/or trade. This ironically made the RBI ban itself illegal.
Year 2021- Is Bitcoin legal in India,current status.
This year our government came up with a new bill, Cryptocurrency and Regulation of official Digital Currency in India Bill-2021 that aims at launching an official digital currency. The government proposed to introduce this bill in the Lok Sabha but no progress has been made so far. New bill clearly indicates authorities will come up with a law soon.
Latest news and parliament discussions hint that the government will move towards regulating crypto assets. In a recent interview our Finance Minister Nirmala Sitharaman said, the government is negotiating with RBI upon this and want to take a calibrated stand. Looking at the worlds response to cryptocurrency, they don’t want to take any extreme decision. She added, they won’t look inwards as they wish to have a window available for all kinds of experiments in the crypto-world. On 31st of May RBI clarified, the 2018 circular on which financial institutions relied is no longer valid.
Circling back to my previous statement, as of today Bitcoins and other crypto currencies are legal in India. That’s because no laws exist yet. Making it neither illegal nor legal and in order to solve this conundrum laws will soon be implemented. Perhaps, our government will incline towards regulating crypto rather than banning it. Ensuring crypto investors with further safety through regulations and making it completely legitimate.