Learn Cryptocurrency
13 Dec 2021

Is Ethereum Legal in India?

Devansh Sinhal

Bitcoin has slowly and gradually influenced the Indian finance market in a broad manner. In the past decade, digitized currency has proved to be a viable alternative for most, if not all, fiat currencies. In fact, countries like El Salvador and Portugal have already begun the process of incorporating cryptocurrencies into their national financial systems by making Bitcoin a legal tender and withdrawing capital gain taxation from crypto gains respectively.

In developing countries like India where there isn’t much formal education about cryptocurrencies and a very small percentage of the population choose to invest in these assets, there is a lot of confusion regarding legality. Even though cryptocurrencies might promise to bring revolutionary technology to our everyday lives and transform them sci-fi style, there’s still much discord over how governments are going to react – whether they’ll embrace crypto or banish it. Although the decentralised nature of cryptocurrencies does not let them get ‘banned’ per se from any country, strict regulations can make investing or trading much more difficult for individual investors.

The growing demand for cryptocurrency transactions within India and outside its borders have forced the government to take notice of this ever-expanding asset class. Although there have been some regulations from the Indian government regarding assets of this nature in the past, they still do not serve the purpose of being concrete, implementable guidelines for the taxpayer. Taxation laws are still vague on the subject as accountants do not know whether to categorise gains made from cryptos as ‘capital gains’ or not.

Also Read: What is EIP-1559 & Its effect on ETH Price

Key Takeaways

  • Ethereum is a decentralised cryptocurrency that specialises in providing a platform for the creation of special software called ‘smart contracts’
  • Ethereum and other cryptocurrencies in India are completely legal due to the absence of a law that prohibits them in any way
  • There is, however, a lack of regulatory frameworks and mechanisms for crypto from the government’s side in terms of taxation and accountability mechanisms
  • Ethereum can be bought on CoinSwitch Kuber within minutes, at a minimum investment of just INR 100!

Is Ethereum Legal in India?

Yes, Ethereum is legal in India. 

Ethereum is a decentralised network that acts as a platform for the creation of smart contracts – programmable software implemented by the blockchain to bring a new tier of enforceability, security and efficiency to high-value contracts. The digital token that is based on Ethereum is called Ether (ETH) and can be used to transfer value from one person to another just like Bitcoin. Ether can also be bought and traded on any crypto exchange (that supports it, of course) and can be termed as a volatile asset class just like other cryptocurrencies. Ether is one of the largest cryptocurrencies out there with a market cap just below Bitcoin, valued at around $412 billion as of 12 October 2021.

The legality of Ether or any other cryptocurrency in India follows a set of winding pathways. Although the sale and purchase of cryptocurrencies are legal in India, there is no governing body to regulate or protect them. This means that yes, it is legal to buy, trade, or invest in Ethereum in India.

The lack of regulations in this sphere of finance, however, provides a whole new set of problems altogether. Without any regulations in crypto assets whatsoever and the absence of a government body regulating them, there is a lot of confusion amongst new investors. They are hesitant to enter the crypto market.

Not only that, though. Cryptocurrencies are also not mentioned in the India Income Tax Act and no rules for their taxation have been formally established. The Reserve Bank of India (RBI) has not yet imparted Ether or any other cryptocurrency the status of legal tender in India.

The RBI in 2018 prohibited banks, NBFCs, and other payment systems under them from interacting with cryptocurrencies and the entities that propagated them. However, this was quashed by the Supreme Court in March 2020. The judgement of the Supreme Court came as a welcome relief and a subtle indication of the widespread sentiment for cryptocurrencies and their potential future in the financial picture of the nation.

In short:

  • Is Ethereum valid in India? Yes! Ethereum is legal in India and there is no law that explicitly bans the purchase, sale, or trade of any cryptocurrencies
  • There is, however, a lack of regulation and governmental guidance on the subject, which are making investors wary
  • Taxation is also vague with no formal guidelines from the government with regard to capital gains structure on crypto
  • While the RBI had banned banks and other financial institutions from interacting with cryptos, the Supreme Court quickly intervened and said otherwise
  • Since then, there have been no major clashes or updates on the subject of Indian governmental intervention in crypto

List of Countries Where Ethereum is Legal

There are a lot of countries that have stayed silent on the subject of cryptocurrencies just like India. However, there are some others who have spoken out in positive ways regarding its implementation. Here is a list of countries where Ethereum is legal:

is ethereum legal in india

  • El Salvador – The country has recognised Bitcoin, specifically, as legal tender. However, the adoption of crypto itself points to the legality of other forms of crypto coins in the nation, including (but not limited to) Ether
  • The USA – The US government has been on the positive side of the debate on whether to embrace crypto or not. Several businesses based in the country have started accepting Bitcoin or other cryptocurrencies in payment for goods and services
  • The European Union – The EU has brought cryptocurrencies under existing taxation laws indicating that it accepts crypto as a reasonable ‘instrument of investment’

Where Can I Buy Ethereum in India?

To buy cryptocurrencies in India, you need a few basic things first. They are – a stable internet connection, a reliable exchange, a bank account and of course, the funds. 

CoinSwitch Kuber is a global aggregation of liquidity from crypto exchanges all over the world. CoinSwitch caters to its users by providing the best prices for buying and selling cryptocurrencies on its platform. There are more than 100 coins and tokens available on CoinSwitch Kuber and Ether is one of them. Trade ETH to INR pair through CoinSwitch. 

On CoinSwitch, users need to register themselves using their mobile number. A KYC process mandated by the Government of India needs to be completed for the user to be able to transact in crypto. This takes less than 5 minutes to complete. Once a bank account has been added to the account and the funds have been transferred post-KYC, you can buy Ethereum in India!

Tracking and analysing your crypto holdings is also really simple on CoinSwitch. Users can look at all their crypto holdings under the ‘Portfolio’ tab on the app. The app also displays the total and individual profit/loss percentages for each coin so that trading is easier.

CoinSwitch Kuber is one of the best platforms you can use to buy Ethereum in India. Download the Android and iOS apps here.

Wrapping It Up

To sum up, Ethereum is one of the most renowned cryptocurrencies out there. With more adoption of smart contracts and increased usage in DeFi, it could emerge as one of the top financial assets in the world.

Investors in India can take advantage of this potential opportunity to invest in Ethereum and 100+ other cryptocurrency coins with CoinSwitch Kuber right away.

So, what are you waiting for?

Frequently Asked Questions

Is buying Ethereum legal in India?

No, buying and selling Etherum is completely legal in India. There is no law that prevents the trade of cryptocurrencies in this country.

Is cryptocurrency legal in India?

Yes, holding, purchasing and selling cryptocurrencies are legal in India. They are, however, operating without a regulatory framework which is expected to come soon.

Is Bitcoin legal in India?

Yes, Bitcoin transactions are legal in India.

Is Ethereum Legal?

Yes, purchasing, holding, and selling Ethereum is legal in India.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Devansh Sinhal

Content Writer

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