Cryptocurrency is that one explosive bit of technology that everyone in India is now talking about. Whether from the perspective of long-term investments, short-term trading, or simply to use in international markets and transactions, crypto has caught the attention of the Indian financial sector.
The question of whether crypto trading is legal in India has been one that has attracted considerable debate. The RBI attempted to ban the trade of cryptocurrencies in 2018 with a circular, which was later shot down by the Supreme Court of India. And finally, on Monday, 31st May 2021, the RBI confirmed with banks that the 2018 circular could no longer be used to hinder crypto trades in the country.
This announcement came as a sigh of relief for a large number of investors, who have a lot of money tied up in various cryptocurrencies. It is estimated that over 7 million Indians already own cryptocurrencies worth $1 billion. These estimates are quite significant and signify exactly how quickly crypto is gaining favor amongst Indian investors.
Is Crypto Legal in India?
Even with so much scrutiny surrounding whether or not crypto will face a blanket ban in India, the legal status of the digital currency is unclear to many. But to provide some clarity, we can safely say that while buying and selling crypto is entirely legal in India, it is a sector that has been left unregulated by the Indian government.
However, due to the recent boom in the crypto market, the Indian government has begun to consider regulating the industry, which would mean more safety for crypto investors, lesser chances of fraudulent transactions, as well as tax revenue for the state.
Recently, there was talk of a possible crypto bill that may be proposed by the government to stop the exchange of private cryptocurrencies in India. This was suspected due to the government’s plan to launch a “sovereign” digital currency of its own.
However, for now, these plans seem to have been halted. And crypto trades are back in all their full vigor, especially following the 2018 RBI circular becoming a non-issue for the future of crypto in India.
Will Cryptocurrency Be Regulated in India?
There are many obvious merits to regulating cryptocurrency in India, making it possible for investors to safely add Bitcoin, Ethereum, Litecoin, and many more such coins to their portfolio. Additionally, with a more regulated framework governing cryptocurrency, it can finally be used as an actual currency for more than just international transactions or for use on gambling and betting sites and apps in India.
Regulation would also ensure that crypto cannot be used in illegal activities or as a way to circulate black money via digital currencies in the Indian market. Therefore, we can all agree that regulation of cryptocurrency has become a need of the hour, especially given the rapid rate at which digital currencies seem to be picking up all over the world.
But there seems to be hope for regulation in India. This was confirmed by our Finance Minister, Nirmala Sitharaman herself, who has said that the Centre is open to experimentation with new technologies (such as digital currencies) and is not closing its minds to them.
Just recently, the government has taken an encouraging step, which can take us closer to the possibility of regulation of crypto trades in India – the Ministry of Corporate Affairs or MCA has made alterations to the Companies Act. According to these changes, companies are now required to disclose any trades in cryptocurrencies that they have undertaken.
Experts agree that this level of regulation can mean a step in the right direction, with more regulation and taxation rules to follow. Since there isn’t any blanket ban on crypto coming anytime soon, we can expect that the central government might actually consider starting up a regulatory body to help Indian investors safely trade in digital currencies.
What is the Future of Crypto in India?
There is no denying that cryptocurrency has become increasingly relevant as an alternative to traditional money in today’s time. And even the Indian government is aware of the possibilities that are created by cryptocurrencies and the blockchain technology that it is built on.
Therefore, the government has confirmed that they are working on its own digital currency, which would open up the Indian finance sector even further to the advantages of cryptocurrencies. “The time has come to leverage its applications while at the same time strengthening the digital infrastructure,” the RBI governor, Shaktikanta Das said when asked about the digital currency that the RBI is working on.
With no immediate plans for a ban on private cryptocurrencies and the possibility of an Indian digital currency coming up very soon, the time seems right to consider investing in crypto. While the currencies may be known for their volatile price changes, the technology behind cryptocurrencies may just be the future of money, not just in India, but the world.