Are Cryptocurrencies Legal in India?

At 10.07 crore, India has the highest number of cryptocurrency owners in the world. Around 15 per cent of the population owns cryptocurrency. Crypto fever is rising, but many prefer to invest in traditional assets such as gold and mutual funds. A key reason for this is the belief that cryptocurrencies are illegal. This is a myth.

To clarify, India has no legal framework for cryptocurrencies yet. The Government of India and the Reserve Bank of India do not recognise them as legal tender. However, no laws prevent a person from investing in them. Simply put, you may not be able to buy a cup of coffee with cryptocurrencies yet, but you are free to trade them on exchanges and gain profits without worry.

It will help to understand the various developments that have shaped the crypto space in India over the past decade.

A timeline of events

Bitcoin, the world’s first cryptocurrency, was conceptualised in 2008. It was used as a mode of payment for the first time two years later. In 2011, more cryptocurrencies emerged. Adoption increased globally, including in India. In response, the Reserve Bank of India issued a statement in 2013, warning that cryptocurrencies were not backed by a central bank and that their value was speculative.

Investment in cryptocurrencies continued to rise after the 2016 demonetisation as digital payments picked up across India. The following year, two public interest litigations were filed in the Supreme Court. The first asked for a complete ban on cryptocurrencies and the second called for their regulation. In 2018, the RBI issued a ban on cryptocurrencies. In 2020, one week before COVID-19 was declared a pandemic, the Supreme Court overruled the RBI ban, terming it unconstitutional and confirming that cryptocurrencies were unregulated but not illegal.

Today, cryptocurrencies are actively traded across India. Investment is rapidly growing, especially in tier-2 and tier-3 cities. Meanwhile, the government is working on a draft cryptocurrency bill, which will determine their final status. Further, Finance Minister Nirmala Sitharaman has stated that the government is not against cryptocurrencies and that it would consider how they could help India’s FinTech sector. Until then, investors can trade in any cryptocurrency without hassle.

For any queries related to crypto trading, simply drop us a mail at support@crosstower.in. Our team of experts will get back to you shortly.

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