All cryptocurrencies, especially Bitcoin, is legal in India. With over 10 million Indian investors investing in it, bitcoins are legal and enjoy tremendous support from a large and growing crypto community in India.
India has come a long way in the cryptocurrency sector. From straight out banning banks from trading crypto in 2020 to creating a digital “national crypto” currency, the Indian government is deeply immersed in this sector.
Table of Contents
Is Bitcoin Trading Legal in India?
Yes. Bitcoin is legal in India.
For those who are concerned that it is illegal, let us put the fact out there first:
“Bitcoin is not illegal; It’s unregulated.”
This is where people often get it wrong, Bitcoin isn’t illegal, but yes, it’s unregulated. The government hasn’t restricted people from buying, selling and holding cryptocurrencies. Anybody can freely trade in Bitcoin or any of the other cryptocurrencies.
If you are still wondering if ‘Bitcoin is safe and legal in India?’ we suggest you watch this video:
However, unlike the stock market, the cryptocurrency market isn’t yet regulated.
What that means is, the stock market has a central governing body that overlooks its operations; SEBI (Securities Exchange Board of India). It helps in enforcing laws and protects the interest of investors in that market. The crypto market, on the other hand, has no governing body. Instead, the market is self-governed by all stakeholders ( Exchanges and Investors).
Three Reasons for Cryptocurrency Still Being Unregulated
The lack of regulations around cryptocurrencies is majorly because of the following three challenges. As we overcome them, India will hopefully see cryptocurrency regulations coming to life:
1. Managing Decentralisation is Challenging
Cryptocurrencies, including Bitcoin, operate on a decentralised network called blockchain, which is out of any individual or entity reaches.
Blockchain was built to decentralise the financial ecosystem, which is otherwise heavily centralised. The prevailing banking system has a central authority that directs its work.
Decentralisation ensures that no one person or authority has complete control over the crypto market’s functioning.
Hence, it becomes difficult for the government to govern something which is out of their control.
Decentralisation poses the challenge of imposing regulations on cryptocurrencies since there is no way to fully enforce laws.
2. Cryptocurrencies Are a Newfound Asset Class.
Though it’s over a decade since cryptocurrencies have been around, it’s a brief span for any asset’s life. Asset classes need a considerable amount of time before they fully evolve in terms of regulations and potential.
‘If cryptocurrencies are the GenZ and Millennials, asset classes like gold and stocks are from the Victorian era.’
Gold and stocks have been around for 5000 years and 64 years in India, respectively. The current state of these markets is the final product of the several years invested in defining their regulation. Cryptocurrencies are now going through the phase where the government sets a framework for its functioning.
3. Change Isn’t Easy; Hence Nobody Likes It, and It Takes Time
Technology is all about doing things innovatively. They bring about a change in the way things are done, and since change is uncomfortable, there are bound to be roadblocks.
Even the internet faced objections in its initial phases, but it eventually moved past them and became the inevitable reality of today.
The same seems to be true for cryptocurrencies; they are a disruptive technology. They take away all the power from one entity, thus bringing about reform. Hence it needs a few more years until people fully accept it when it becomes binding.
Countries That Regulated Cryptocurrencies
Bitcoin is legal in most countries across the globe. In fact, a handful of economies have already regulated the crypto space.
For example, Malta, Singapore, Switzerland, Argentina, the U.S etc., have regulated cryptocurrencies in some or other capacity.
Costa Rica announced that their employees might be allowed to get paid in cryptocurrencies. New York has proposed a conditional licensing framework to make it easier for start-ups dealing in virtual currencies to operate.
These crypto-friendly nations didn’t just wake up one day and announce the crypto regulation. They were also in the grey area that India is in right now, but after realising that.
‘Cryptocurrencies, Blockchain and Decentralisation is the future and the future can’t be suspended.’
They pulled their sleeves up and worked on setting up a regulatory framework.
India also seems to be moving in the same direction. The Reserve Bank of India initially issued circular directing banks to refrain from engaging in cryptocurrencies in 2018. However, now that cryptocurrencies have lived another few years and become more mainstream, their views are changing.
Relationship between Bitcoin and the Indian Government
2020 brought about a breath of fresh air when the Indian government started to look at cryptocurrencies from a bright outlook.
After noticing the advancements that could happen with blockchain and crypto and how developed nations like the U.S and Singapore have worked along with it. The Indian government revisited their decision of prohibiting banks from supporting crypto transactions and reversed the order.
In March 2020, the Supreme Court of India freed banks to engage in cryptocurrencies, where they had earlier restricted banks from engaging in cryptocurrency transactions.
Later, the Finance Ministry has also drafted a cryptocurrency bill expressing their intention to launch a national digital currency using blockchain technology. The bill also entails clauses related to directing the working of digital assets.
Another positive stance from the government came when the Ministry of Corporate Affairs announced an amendment for companies mandatorily disclosing their cryptocurrency holdings. This update will bring about a lot of transparency into the system.
Furthermore, our Finance Minister, Nirmala Sitharaman, has been very transparent and vocal about this matter. She has explicitly voiced out that the government has no intention of outrightly restricting cryptocurrencies. She has indicated that the Finance Ministry will soon come up with a framework for it.
It suggests that the government understands that cryptocurrencies and blockchain are a part of the technological advancements going around, and we can’t move without them.
To sum up, the current state of crypto in India is as healthy as it could be. Though we lack a defined regulatory framework, the communications from the government so far have been very favourable. However, because of the three challenges that we discussed above, the regulators need some time.
Investing in Bitcoin in India
Big names globally like Michael Novogratz, Elon Musk, Richard Branson, and MicroStrategy, GreyScale, Tesla etc., have bought into cryptocurrencies. In India, famous personalities like Rakesh Jhunjhunwala, Amitabh Bachhan etc., also have invested in Bitcoin.
Anybody today can own Bitcoin in under 5 minutes and with only ₹100, Thanks to cryptocurrency platforms like CoinSwitch Kuber. Considering that it’s so easy to invest in Bitcoin, apart from these big names, millions of retail investors have invested billions of rupees in cryptocurrencies, including Bitcoin.
Thus hovering back to our initial question – are Bitcoins legal in India? Heck yeah, Bitcoin is legal in India.
FAQs on Legality of Cryptocurrency in India
Q1. Can I buy Bitcoin in India?
Yes, you can buy Bitcoin in India. You can download CoinSwitch Kuber from the App Store or Play store, finish KYC and start investing in Bitcoin with just ₹100
Q2. Where can I buy Bitcoins in India?
There are three ways to buy bitcoins in India:
Cryptocurrency Exchange – Several apps and websites offer exchange services to help investors buy bitcoins. Some such reliable trading apps are CoinSwitch Kuber (the largest crypto platform in India), Giottus, Cashaa, Cex, etc.
P2P Directory – A Peer to Peer (P2P) Directory is a peered app or website that allows investors to trade in bitcoins directly without the need of any trusted third party.
While governments worldwide are trying to determine the right place for cryptocurrencies in their economic landscapes and CBDCs (Central Bank Digital Currencies) or digital versions of fiat money being conceptualized, the revolution initiated by Bitcoin is likely to gather momentum in the future.
So I would say this is the right time to be a part of the global economy of the future but also invest in cryptocurrencies only based on your research !!
P.S. KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.