Are Cryptocurrencies and Virtual Digital Means (VDAs) illegal in India? While every investor would worry to untangle the real substance in-between the fine lines, the short and sweet answer is no’, VDAs, of which cryptocurrencies are a form – aren’t illegal in India as of March 2022.. Still, having said that, the damocles’ brand dangles over future of cryptocurrencies in India in terms of policy regulations. It’s noteworthy that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is still, in a scary icon, staying to be tabled in Indian congress (hopefully by May 2022). The bill proposes to enjoin all private cryptocurrencies in India still permitting for certain exceptions that promote blockchain technology. It also creates a frame for central bank digital currency (CBDC) that will be issued by the Reserve Bank of India.
The silver lining in pall still is the recent union budget of India, where Indian finance minister in her budget speech defined Virtual Digital Asset (VDAs) and proposed a 30 flat income duty on capital earnings from VDAs ( including cryptocurrency), to which numerous judges have interpreted as a positive step towards the shift in the station of Indian lawgivers. Still, a many may exactly know what’s there’s in the store.
Size of the Pie
On business front, as per coinmarketcap data global request cap of cryptocurrencies as on March is close to USD 2 Trillion and there are further than cryptocurrencies in the world. As per a report published by chainanalysis, India stands alternate encyclopedically at Crypto Adoption Index (2021) rankings. Domestically, In one of their interviews,co-chairs of the Blockchain and Crypto Means Council (BACC) of the Internet and Mobile Association of India (IAMAI) mentioned roughly 15-20 million cryptocurrency druggies in India hold around USD0.9 billion (INR Billion6.6) worth crypto means which makes India a implicit request for cryptocurrencies and other VDAs. India on other hand has around 350 crypto launch-ups and two crypto unicorns as per a causerie published by the Observer Research Foundation.
The Reserve Bank of India (RBI) has taken a hard stage on private cryptocurrencies; still, it’s exponent of Central Bank Digital Currency (CBDC). In a recent speech, RBI Deputy Governor TR Sankar cited cryptocurrencies as a trouble to the country’s fiscal and macroeconomic stability. He also advised investors about it.
The RBI’s indirect dated April explicitly banned all regulated banks including Cooperative banks to deal in Virtual Currencies (VCs) or give services for easing any person or reality in dealing with or settling VCs and also banned banks to maintain accounts, registering, trading, settling, clearing, giving loans against virtual commemoratives, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/ damage of plutocrat in accounts relating to buy/ trade of VCs.
It also instructed to cease being relationship with any similar guests within three months from the date of the indirect. This indirect was challenged by IAMAI in Supreme court of India, eventually on March 04, 2020, the court ordered to set away RBI’s indirect. The RBI on May 31, through its indirect asked banks not to cite its 2018 order as a reason to deny banking services to guests who deal in cryptocurrencies.