With more and more people investing in popular Bitcoin and relatively lesser know Shiba Inu, all thanks to Elon Musk probably, cryptocurrency craze has indeed gripped India. More than 2 crore people own cryptocurrencies in India, according to the popular crypto-exchange platform WazirX. Indians have invested around $ 6.6 billion in cryptocurrencies till May 2021, according to an Analytics Insight report. This saw a over 600 per cent jump from $923 million in April 2020. At present, over 350 startups operate in the blockchain and cryptocurrency space.
While new age investors, especially millennials, taking to crypto with such gusto, the million dollar question is right now — is cryptocurrency legal in India? At present, there is no legislature that covers cryptocurrecies in India. However, that does not make cryptocurrency illegal in the country. It simply indicates that there is no regulatory framework to safeguard cryptocurrency owners in the country. To mend this lack of regulatory framework in the crypto world, the central government is all set to table The Cryptocurrency and Regulation of Official Digital Currency Bill in the Parliament during winter session.
The new bill will aim at prohibiting private cryptocurrencies while providing a framework for the creation of an official digital currency by the Reserve Bank of India. “The bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the bulletin said. It also sought “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.”
Crypto experts are hopeful that the government will not opt for a blanket ban on cryptocurrencies in India. The Centre may recognise it as an asset, like real estate, stocks or gold. Then, the government will levy capital gains tax on any profits made after selling cryptocurrencies.
“A well assessed and thought through regulation would pave the way for greater adoption of the technology and will help millions of Indians embrace this new age asset class. We are looking forward to the next steps on this,” said CoinDCX spokesperson.
On private cryptocurrencies, Hitesh Malviya, founder, itsblockchain.com, India’s first and oldest Blockchain Cryptocurrency Publication, “We have a lot of unclarities in regards to the definition of private cryptocurrencies that are creating chaos amping retail investors right now. It’s difficult to herd behavior, they are panic selling without even knowing about the definition.”
The central government will not allow cryptocurrency as a legal tender in India. This means that you can not go to a restuarant, have a meal and pay in cryptocurrency. Similarly, you can not go to a bank and ask for your cryptocurrency to be be converted into rupees. Only a few countries including El Salvador has accepted cryptocurrency as a legal tender so far.
During Budget 2018-19, the Union government had said that it will “take all measures to eliminate use of these crypto assets in financing illegitimate activities or as part of the payment system.”