Is Trading in Cryptocurrency Legal in India?

Cryptocurrency trading Legal in India?

Technological advancement around the globe has paved the way for making the world digital. With the growing fashionability of internet technologies, another advancement has come to light in recent times known as virtual currency or cryptocurrency.

Cryptocurrency similar as Bitcoin, due to its growing fashionability, has come one of the most common forms of internet currency being used by millions of internet druggies for colorful digital deals from reserving hospices and breakouts to copping jewelry and computer corridor.

Since Cryptocurrency isn't regulated by any central authority, trading in an limited sector can lead to plutocrat laundering, fraud and indeed funding terrorism. In this law companion, we're going to cover all that you need to know about trading in cryptocurrencies and the law governing it in India.

What's Cryptocurrency?

Cryptocurrency refers to a digital or virtual currency that works as a medium of exchange and uses cryptography to secure and corroborate the deals along with to control the creation of new units of a particular cryptocurrency. In other words, cryptocurrency is limited entries in a database that can not be altered unless certain conditions are fulfilled.

Is Trading in Cryptocurrency Legal in India?

The government has, time and again, advised the public of India with the pitfalls involved in dealing with virtual currencies stating that virtual currencies aren't a valid legal tender in India while also making it clear that the virtual currencies don't have a nonsupervisory protection in India. Also, colorful warnings were also issued by the RBI through its press releases regarding the implicit pitfalls of use of cryptocurrencies to the fiscal system of the country. A report recommending certain measures in relation to cryptocurrencies, which included a complete ban of private cryptocurrencies was also released by the Inter-ministerial commission on February 28, 2019. The commission also prepared a draft bill known as the Crypto Token and Crypto Asset (Banning, Control and Regulation) Bill, 2018. Still, the use per se was noway banned.

Still, in April 2018, the Reserve Bank of India (RBI) had banned dealing in virtual currencies in India through its announcement dated 06.04.2018. The notice that was issued by the central bank while exercising its powers stated that realities regulated by RBI'll not deal in virtual currencies. Thus, since the bank realities of RBI can not deal in purchase or trade of virtual currency, the consumers could neither process nor settle their cryptocurrency deals.

Although, the validity of the notice was challenged in colorful writ desires led by the realities trading cryptocurrencies in India. In headway to which, the Supreme Court of India in its recent judgment in the matter of Internet and Mobile Association of India vs Reserve Bank of India has set aside the announcement issued by RBI while creating small expedients for the consumers in India who wish to trade in cryptocurrencies.

In its judgment, the apex court anatomized the part of RBI in the frugality as central bank to manage currency, plutocrat force, and interest rates and honored that the ideal of RBI is the conservation of price stability. It further noted that cryptocurrency is able of being accepted as a valid payment for the purchase of goods and services and payment systems for the same can be regulated by RBI.

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Laws Governing Cryptocurrency in India

As stated over, cryptocurrencies aren't legal tender in India, and while exchanges are legal, the government has made it veritably delicate for them to operate. Although, there's a lack of clarity on the duty status of the cryptocurrency, the president of the Central Board of Direct Levies has stated that anyone making gains from Bitcoin will have to pay levies on the same. It has also been suggested by the Income Duty department that the gains from cryptocurrencies should be tested as capital earnings.

Since there's no specific law governing cryptocurrencies, the government of India is looking at the possibility of cryptocurrency regulation. The special clerk of profitable affairs in 2017 had formed a commission to suggest ways to attack issues related to cryptocurrencies which were also working on a draft bill regulating cryptocurrencies. According to the draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019, holding, dealing or dealing in cryptocurrencies similar as Bitcoin can land you in jail for 10 times. Besides making it fully illegal, the bill makes holding of cryptocurrencies a non-bailable offence. Still, the fate of the bill is yet unknown.

There are numerous other countries which have formalized cryptocurrency in their separate governance. For case, Canada doesn't treat virtual currency as a valid legal tender but allows the trade of these currencies in the country by making many emendations in Canada's Proceeds of Crime ( Plutocrat Laundering) and Terrorist Financing Act. This not only allows virtual currencies by legalising as a plutocrat service business for protection from plutocrat laundering. Still, there are numerous countries that are feting and legalising this exertion and are successfully suitable to stretch the dealers under colorful laws. For illustration, Israel levies it as an asset, while United Kingdom levies it under colorful branches like Corporation pay or Commercial Duty while individualities pay capital gain duty.

The below cases from colorful countries show that there are numerous ways to regulate this business exertion which could be a success, though actually, there are numerous challenges ahead in regulating this business exertion. From India's perspective, a major point for consideration is that preface of Digital rupee as a legal tender may be a point of conflict as, by way of banning other virtual currency and preface of Digital Rupee, the government may have monopoly in this business. The Hon'ble Supreme Court of India has noted this aspect while agitating this issue but finessed discussion on it by stating that such a situation has not yet arisen as enactment is still in bill shape.

How can a lawyer help you?

Since the concept of cryptocurrency is new in India and there are no regulations regulating the same yet, it is imperative that a banking and finance lawyer is consulted before getting involved in any transactions related to the same as any operation involving cryptocurrency requires vigilance and legal knowledge without which the person involved can face serious losses or in the worst-case scenario, legal charges.