Is Bitcoin Legal In India? Indian Government shares viewpoint

While Bitcoin does not seem to be tired of hitting newer highs on a daily basis, many governments feel concerned about the rising risks of investing in this cryptocurrency, as well. In regards to this matter, today we try to find an answer to the following question: Is Bitcoin Legal In India?

– The legal status of Bitcoin in India is still uncertain – the government appears to be sending mixed signals in regards to this matter. In fact, Indian officials still did not come up with a definite answer to the question: Is Bitcoin legal in India?

Is Bitcoin Legal?

However, when it comes to the legality of Bitcoin, many countries feel uncertain. In some of my previous articles, I have discussed the countries, where Bitcoin is legal and illegal. In this particular article, I want to focus on India Bitcoin trading legal status, considering the amount of demand coming from this country.

Talking about the regulation of Bitcoin in India, it is vital to point out the three most significant authorities, which would be responsible for answering the question we posed in the beginning. These include the Government of India, the Supreme Court or the Reserve Bank of India (RBI).

Let’s look into their stances in regards to Bitcoin and other altcoins in particular.

Reserve Bank of India Bitcoin Legality Stance

RBI has been sending certainly disapproving signals in regards to the legality of Bitcoin throughout the years. The first announcement from the central bank of India appears back in December 2013. That time, the RBI has warned people against the ‘potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.’

Then, four years later, in February of the current year, the officials of the central bank have highlighted its opposing stance in regards to Bitcoin. The bank has stressed that it has not given ‘any license/authorization to any entity/company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.’

Following on this, in September 2017, the executive director of RBI, Sudarshan Sen, has stated:

“As regards non-fiat cryptocurrencies, I think we are not comfortable…non-fiat cryptocurrencies like Bitcoins, for example. As regards non-fiat cryptocurrencies, I think we are not comfortable…non-fiat cryptocurrencies like Bitcoins, for example.”

In November, Reserve Bank of India signaled cryptocurrencies ban. The last message from RBI appeared on the December 6th, when the officials have warned the public against the cryptocurrencies once again.

Is Bitcoin Legal in India? Government and Supreme Court Point of View

In June 2017, one of the main Indian Bitcoin exchanges, Zebpay, has informed the public that the Indian authorities have ruled in favor of regulating Bitcoin.

One of the members of parliament of the ruling BJP in India, Kirit Somaiya, has been expressing his doubts in relation to the Bitcoin legality in India. Once, Mr. Somaiya has called a Bitcoin a Ponzi scheme. However, he was later criticized for the inability to understand the essential differences between Ponzi scheme and Bitcoin.

Yet, the green light from the officials has never been materialized. Earlier in April 2017, the Inter-Disciplinary Committee of Indian Ministry of Finance has been rigorously investigating the Bitcoin legality in India. The officials have been looking into ways of regulating the Bitcoin market.

Finally, just last month, the Supreme Court of India has ordered the government to react to a petition for Bitcoin regulation. The filed petition was also pleading to ensure that the digital currency will be made accountable to the exchequer.

On the 30th November, Arun Jaitley, the finance minister of the country, has stated:

“…As far as the Indian government’s stance is concerned, we have not given any legitimacy to cryptocurrency. Yes, we have received the report, and it is under examination.”

Blockchain in India

A number of Indian big banks, such as ICICI, SBI, and Kotak Mahindra, have been using Blockchain technology. Moreover, the RBI officials have been hinting that the central bank might consider creating its own cryptocurrency. Following the news, some of the online reports speculated that the government of India has planned to introduce the cryptocurrency ‘Lakshmi’.

As of the moment, Bitcoin undergoes several challenges in terms of existing Indian laws. Mostly, the cryptocurrency struggles to be widely adopted thanks to the RBI Act of 1934, the Foreign Exchange Management Act (FEMA) of 1999, and the Prevention of Money Laundering Act (PMLA) of 2002.

In fact, a legalization of Bitcoin or even the introduction of a new cryptocurrency would mean the changes in RBI Act of 1934 and FEMA. Currently, Indian officials have adopted the ‘wait and see’ approach in regards to the cryptocurrency market.