The RBI had indeed imposed a ban on banks and financial institutions from facilitating crypto-based transactions in 2018.
It stated that cryptocurrencies are not considered as a legal tender in India. However, there is no law in India or any country specifying that trading in cryptocurrencies is illegal.
Earlier in 2020, the ban imposed by RBI has also been lifted recently, giving banks and other financial institutions the freedom to assist crypto-based transactions.
But the freedom to trade in cryptocurrencies never ceased and remains.
Also, the central government of India is having talks with the RBI in matters relating to the regulation of the crypto market, which might become the happy news of 2021.
3. There is No Tax on Crypto Trading
Yes, cryptocurrencies are decentralized.
And they are not controlled and regulated by any central authority or the government. But this does not mean that if you trade in cryptos, you are not required to pay tax.
Just like every other investment, profits from the sale of cryptocurrencies are subject to capital gains tax under the Income Tax Act.
If you make a profit of more than ₹10 lakh within one year, you will be taxed at 30% on the surplus profit. Suppose you make profits exceeding the limit by holding the currencies for at least 2 years, 20% capital gains tax will apply to such profits.
However, these are the best practices crypto investors are following but as the law of the land, yet a crypto taxation bill is pending from the government’s end.
4. Cryptos are Used for Illicit Purposes Only
Money laundering and illegal practices have been around even before the inception of cryptocurrencies.
People who possess black money, have tried and tested many ways in which they can convert it into legal cash, without paying taxes on it.
The silk road drug cartel was busted in 2013. They had been using cryptocurrencies for their transactions. Similarly, back in the 1970s, a decisive drug cartel lead by Pablo Escobar had made $60 million daily profits from drugs.
Does that mean that the US dollar is used only to facilitate illicit purposes?
No, right !!
Cryptocurrencies are emerging as a store of value and medium of exchange used by millions. Also, crypto exchanges India and abroad are conducting KYC too at the time of registration of new users intending to reduce the illicit trade of cryptocurrencies.
5. You Require Huge Capital to Invest in Crypto
The most popular cryptocurrency – Bitcoin has increased in value by million-fold over the past decade, putting one coin’s value in lakhs. This is a reason for which people shun away from cryptocurrencies thinking that it is a costly affair.
First of all, Bitcoin is not the only cryptocurrency available. More than 7000 cryptocurrencies other than Bitcoin are available in the market.
Secondly, no matter what the value of the currency is, most crypto exchanges in India allow you to invest in Bitcoin and other currencies with a minimum investment ranging between ₹100 and ₹500.
If you can invest only 500, you can still hold 500 worth of crypto assets in your portfolio. Even at CoinSwitch Kuber, any investor can start trading in cryptocurrencies with a minimum capital of ₹100.
Every time you come across some news or fact about any investment, it is better to cross-check and verify its validity. Imagine the level of opportunity lost for someone who turned away from investing in such a valuable asset based on some lie.
So the next time someone spins a tale around cryptocurrency, we believe that you are now equipped to straighten the facts for them :P.
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.