Is it legal to buy and sell cryptocurrency in india

However, despite the mounting excitement, much ambiguity persists around the legality of cryptocurrency in India. If you are considering investing in cryptocurrencies, you want to be sure you are not breaking any law or regulations. Therefore, it’s important to understand the legality that surrounds cryptocurrencies clearly. Here’s a quick primer for you to get going.

1) Are

crypto

currencies legal tender?

Whether an activity is in compliance with the law of the land is critical to understand before wading into the domain..
Here’s a simple analogy: Think of the Internet, it is free, used by billions of people around the world, yet no country owns it or controls it. Cryptocurrency (or crypto, in short) is also somewhat like the Internet. It is not owned or controlled by a country or a bank. They are not issued by the central bank of the country (in our case, the

2) Is it a valid currency in India?

It isn’t a valid currency in the conventional sense, which means that you cannot pay with cryptocurrency to buy and sell anything in India. The currency of a country is legal tender backed by a sovereign guarantee. In India, only the central bank (RBI) can issue any currency.
Crypto, on the other hand, is minted across the world by a complex decentralised, peer-to-peer powerfully coded system. Since it can be traded online within the country, cryptocurrencies are digital currencies and valid as an asset class in India.

3)

Supreme Court

judgement on Crypto:

In the year 2018, RBI had prohibited banks, Non Banking Financial Companies (NBFCs) and payment systems regulated by it, from facilitating financial transactions for entities related to cryptocurrencies. However, this was quashed by the Hon’ble Supreme Court of India in March 2020. The judgement has paved the way for financial institutions facilitating the trading of cryptocurrencies, creating the ground for several crypto market exchanges in the country.

4) Am I doing anything wrong by trading in cryptocurrencies?

No, you are not breaking the law in any way! There is no regulation governing cryptocurrencies in India so far. Recently, during a Parliament session there was a question on whether the Centre intended to bring in a specific regulation around cryptocurrency trading in India. The government responded that if there was a legislative proposal regarding cryptocurrencies and their trading, , it would be introduced in Parliament following due process.

5) How safe is it to trade in cryptocurrencies?

It is as safe as any other investment class, and is subject to underlying market risks such as mutual funds or stock investments. However, share trading and mutual funds are regulated by the government-appointed

NEW DELHI: Cryptocurrency is fast gaining ground as an exciting option among investors in India. The past few years have seen a burgeoning number of investors and analytics suggest that it isn’t just city slickers – most of its recent users come from small cities and towns in India.However, despite the mounting excitement, much ambiguity persists around the legality of cryptocurrency in India. If you are considering investing in cryptocurrencies, you want to be sure you are not breaking any law or regulations. Therefore, it’s important to understand the legality that surrounds cryptocurrencies clearly. Here’s a quick primer for you to get going.Whether an activity is in compliance with the law of the land is critical to understand before wading into the domain..Here’s a simple analogy: Think of the Internet, it is free, used by billions of people around the world, yet no country owns it or controls it. Cryptocurrency (or crypto, in short) is also somewhat like the Internet. It is not owned or controlled by a country or a bank. They are not issued by the central bank of the country (in our case, the Reserve Bank Of India ) as legal tender. Neither are they recognised by the Government as legal tender nor are they regulated by the RBI. There are no laws that prohibit (or allow) trading in crypto. In that sense, cryptocurrency is like any other asset class such as gold, commodities or real estate. People trade in gold without the government creating a law for it. Same is the status of cryptocurrency at the moment.It isn’t a valid currency in the conventional sense, which means that you cannot pay with cryptocurrency to buy and sell anything in India. The currency of a country is legal tender backed by a sovereign guarantee. In India, only the central bank (RBI) can issue any currency.Crypto, on the other hand, is minted across the world by a complex decentralised, peer-to-peer powerfully coded system. Since it can be traded online within the country, cryptocurrencies are digital currencies and valid as an asset class in India.In the year 2018, RBI had prohibited banks, Non Banking Financial Companies (NBFCs) and payment systems regulated by it, from facilitating financial transactions for entities related to cryptocurrencies. However, this was quashed by the Hon’ble Supreme Court of India in March 2020. The judgement has paved the way for financial institutions facilitating the trading of cryptocurrencies, creating the ground for several crypto market exchanges in the country.No, you are not breaking the law in any way! There is no regulation governing cryptocurrencies in India so far. Recently, during a Parliament session there was a question on whether the Centre intended to bring in a specific regulation around cryptocurrency trading in India. The government responded that if there was a legislative proposal regarding cryptocurrencies and their trading, , it would be introduced in Parliament following due process.It is as safe as any other investment class, and is subject to underlying market risks such as mutual funds or stock investments. However, share trading and mutual funds are regulated by the government-appointed Securities and Exchange Board of India ( SEBI ). Due to its decentralised nature, the trading of cryptocurrencies doesn’t fall under the ambit of any regulator and they can be volatile.

bitcoin-legal-india

Bitcoin has slowly but steadily influenced everyone in some way. What’s the deal with this decentralized digital currency whose creator’s whereabouts are unknown? As of July 2021, 650,000 Bitcoin transactions are processed daily. What distinguishes Bitcoin in this thriving cryptocurrency market, where new currencies are introduced daily? 

Bitcoin’s primary advantages are its network effect and proven security. The cryptocurrency is becoming more accessible, with more exchanges, merchants, software, and hardware supporting it. It has arguably the largest developer ecosystem of any coin, with more software and implementations than any other. And now you understand why it is so powerful. 

Is everything, however, so welcoming to Bitcoin?

Many prominent and developed countries, including India, allow Bitcoin trading, while a few countries have banned it, as well as other cryptocurrencies.

Even though it is the face of frankly revolutionary technology and an advent of an exciting future, there’s much to understand for regulators and nations, post which we should hopefully see an exciting embrace of cryptocurrencies. Already, Bitcoin’s immense popularity is forcing everyone across institutions to notice.

What about India? Is there a Bitcoin tidal wave?

Glad you asked. It’s no surprise that it’s gaining traction. According to Chainalysis, cryptocurrency investments increased from $923 million in April 2020 to nearly $6.6 billion in May 2021. India still lags behind other markets, ranking 18th out of the top 25 countries, but the fact that it happened despite a lack of regulatory clarity is admirable. There’s consensus in the crypto community that even the government prefers that cryptocurrency be regulated rather than banned. India now has more than 15 million traders, compared to 23 million in the United States. Is this to say that bitcoin is now legal in India? We’re sure you’ll have more questions. Don’t be concerned. We will do our best to cover the majority of it for you.

1. Is it legal in India to buy bitcoin?

As previously stated, Bitcoin is legal in India, which means you can buy and sell it and hold it as an investment, but there is no governing body to look after or protect it. “There is a lot of confusion in India right now. The thing is that there are no regulations in the country yet. When people hear that, they get scared. The fact is that a lot of things on the internet are unregulated. These included services like Ola and Uber, even e-commerce is un-regulated,”.

2. Is bitcoin taxable in India?

Cryptocurrencies are not mentioned in the Indian Income Tax Act, and no rules have been established. Since the Reserve Bank of India (RBI) has not yet granted bitcoin or any other cryptocurrency’s legal tender status in India, no specific rules govern how these cryptocurrencies should be taxed. This doesn’t mean you can get away with not paying taxes on your profits. Profits from bitcoin sales can be taxed as business income if traded frequently or as capital gains if held for investment purposes.

3. How do I buy Bitcoin in India?

Buying cryptocurrency can be a complicated process, but there are crypto exchanges that make it relatively simple. In most cases, the process is fairly similar. To open a crypto trading account, first, sign up on a crypto exchange, Then, fill out your personal information > Verify your email> and secure your account.

Finally, transfer money (INR) to your trading account, which you can use to purchase bitcoin or any other cryptocurrency of your choice.

4. Can I exchange bitcoin for cash in India?

The liquidity of Bitcoin is one of the reasons why people are buying it. People want to convert their Bitcoin to cash when they’d like to exit their investments for various reasons – from cash needs to simply being bearish on the market. So yes, you can ultimately convert your bitcoins into cash by selling them. And you can do it easily in India with the help of a reputable cryptocurrency exchange.

You’re likely to require a KYC-verified account to exit your Bitcoin to cash, though. So do remember to complete such requirements.

5. Which bitcoin wallet is the best in India?

There are several types of Bitcoin wallets that cater to different needs and differ in security, convenience, accessibility, and other factors. Mobile wallets, desktop wallets, exchange wallets, paper wallets, and hardware wallets are a few examples. The bitcoin wallet functions similarly to an online bank account in that it stores all of your bitcoins. Bitcoins and other cryptocurrencies can be received and safely stored in your wallet. 

Indian investors have been progressively exhibiting interest in supporting the cryptocurrency markets, seeing the potential of the rising market. The market in India, which has around 15 million Indians, has already surpassed the crypto market in the United Kingdom, which has 2.3 million investors. 

This clearly shows that the lack of regulatory clarity has not prevented Indians from operating exchanges. Nothing can be predicted about bitcoin’s future in India at this time, but it is undeniable that it is on its way to becoming a mainstream asset class.

Cryptocurrencies such as bitcoin have caught the fancy of the entire world, and especially Indians. But what does the government think of it? Here’s a quick ready reckoner on the legal state of cryptocurrency in India, and how you can buy or sell one.

About 100 million Indians own cryptocurrencies, according to a recent study by BrokerChoose, making India’s crypto userbase bigger than any other country’s in the world.


With investors taking to crypto with such gusto, the big question to ask is: is cryptocurrency legal in India?

The answer to that question depends on whether we are talking about owning cryptocurrencies or hoping to use it as legal tender.

Owning cryptocurrencies

At the moment, there is no legislature that covers cryptocurrencies in India. But this doesn’t mean that owning cryptocurrencies is illegal. It simply means that in the absence of a robust legislative framework, crypto owners may not be able to necessarily enjoy the same level of safeguards that owners of other asset classes do. For instance, in the banking system, the RBI has appointed an ombudsman who you can approach if you have a grievance with your bank. This may not be possible in the crypto space.

Even in the absence of a policy framework, cryptocurrency exchanges such as WazirX have developed robust systems that allow people to buy and sell cryptocurrencies in a seamless manner.

The massive spike in the price of the cryptocurrency has led to an increase in the number of crypto owners in India, as mentioned at the start of this article. Over the past one year, trading volumes on Indian cryptocurrency exchanges has increased from $200 million to $40 billion.

However, the lack of regulation surrounding bitcoin may change soon, as the government is set to table a cryptocurrency bill in Parliament. Media reports had previously indicated that the government was keen on banning cryptocurrency altogether, given the anonymous nature of its transactions. But Finance Minister Nirmala Sitharaman has pledged that the government will keep an open mind with respect to cryptocurrencies, given that it offers the scope for several promising innovations.

Experts say that the government may recognize cryptocurrency as an asset, like real estate, stocks or gold. This means that the government may levy capital gains tax on any profits made after selling cryptocurrencies, just as one does after selling real estate or stocks.

Cryptocurrency as legal tender

Even if the government recognises cryptocurrency as an asset, it is unlikely to accept it as legal tender.

This means that you cannot walk up to a restaurant, have a meal and expect to pay in bitcoin. Of course, some commercial establishments can and have started accepting payments in cryptocurrencies, but such a decision is purely their own and cannot be forced upon them.

This also means that you cannot go to a bank, and ask for your cryptocurrency to be converted into rupees. Such a transaction can only take place at a cryptocurrency exchange, where willing buyers and sellers exchange cryptocurrencies for rupees.

So far, only a few countries have accepted or are considering accepting cryptocurrencies as legal tender and the list is expected to remain small.

But countries such as China or even India have toyed with the idea of launching central bank digital currencies (CBDCs), which will be similar to cryptocurrencies, except they will be centralized in nature, and will be backed by the country’s central bank.

The upcoming regulation on cryptocurrency in India may usher in such a CBDC, which is expected to be named Lakshmi.

How can you invest in cryptocurrencies in India?

Billions of dollars of trading is taking place every day through various crypto exchanges that serve the Indian market.

You can choose any of the crypto exchanges to start investments in cryptocurrencies and benefit from high returns in this new asset class. Here are the top crypto exchanges serving the Indian market:

  • CoinDCX
  • CoinSwitch Kuber
  • ZebPay
  • UnoCoin
  • How to invest through crypto exchanges?

    Buying and selling cryptocurrencies through crypto exchanges is both easy and simple. It takes a few steps to set up your account and get started. You can finish the process in about 5-10 minutes. However, you can start trading only after your KYC credentials are verified by the exchange.

    Although the cryptocurrency trade in India doesn’t fall under any existing law, exchanges follow KYC norms to ensure the medium is not used for activities such as money laundering.

    Here is a step-by-step guide to investing in cryptocurrencies 

    • Visit the site of a crypto exchange such as WazirX
    • Register yourself with your email id and create a password
    • You may choose another layer of authentication safeguards
    • Provide your KYC details and wait for its verification and approval
    • Your registration will be instant though it may take 1-2 days for approval
    • Once approved, transfer funds to your exchange wallet and start trading
    • Summing up

      Crypto exchanges have an easy and intuitive user interface, allowing you to register and start trading without needing anyone’s support. The process can be completed in a few minutes, and you may start trading the same day. However, like all investments, trading in cryptocurrencies is subject to market risks. To be on the safe side, you should invest only as much as you can afford to lose.

       

       

      Written by Jane