Cryptocurrency has been a notable topic in India for several years, and one Question is roaming around, Is Cryptocurrency Legal in India?
With debates around its legal status, regulation, and taxation, the landscape of crypto in India is both complex and evolving, with new developments shaping how cryptocurrencies are viewed and used. Let’s see the status of is cryptocurrency legal in India as of 2024.
Background of Cryptocurrency in India
India’s journey with cryptocurrency has seen many changes over the years. In 2018, the Reserve Bank of India (RBI) imposed a ban on banking services related to cryptocurrencies, which disrupted a lot of crypto activity. However, the Supreme Court of India lifted this ban in March 2020, allowing banks to provide services to cryptocurrency exchanges. This led to an increase in crypto trading in the country.
Banning Offshore Crypto Exchanges
In early 2024, India took a significant step by banning nine offshore cryptocurrency exchanges, including Binance, KuCoin, and Bitfinex. The Ministry of Electronics and Information Technology (MeitY) initiated this ban due to non-compliance with anti-money laundering regulations. The Financial Intelligence Unit (FIU) had earlier issued a notice to these exchanges, leading to the ban.
Cryptocurrency and Taxation in India
Since, Cryptocurrency is not tax free in India, rise the question Is Cryptocurrency legal in India? In 2022, the government officially recognized cryptocurrencies as Virtual Digital Assets (VDAs) and introduced a 30% tax on any income earned from trading these assets. A 1% tax deduction at source (TDS) is also applied on transactions exceeding a specific limit. This taxation framework has made cryptocurrency more regulated, though it remains a high risk investment due to market volatility.
Buying and Selling Cryptocurrencies in India
Even with the regulatory challenges, buying and selling that cryptocurrency legal in India. Peer-to-peer (P2P) trading remains a popular method for acquiring Bitcoin and other digital assets. Some decentralized exchanges also facilitate transactions. However, users need to comply with the taxation rules and ensure that they are using legal and compliant platforms for their trades.
Cryptocurrency Legal Framework and Regulation
India’s regulatory framework around cryptocurrency has been a topic of ongoing debate that Is Cryptocurrency legal in India? The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was proposed to create a clear set of rules for digital assets, but it has not yet been passed. Meanwhile, the Prevention of Money Laundering Act (PMLA) was extended to cover VDAs in 2023. This requires all cryptocurrency related businesses to adhere to strict anti-money laundering policies and Know Your Customer (KYC) procedures.
Cryptocurrency and the Global Perspective
India is not the only country dealing with cryptocurrency regulations. Nations like China, Nepal, and Egypt have outright banned cryptocurrencies. In contrast, others like the United States and the European Union are working on developing more comprehensive frameworks for regulating digital assets. India’s approach falls somewhere in between, as the government acknowledges the potential of blockchain technology but remains cautious about allowing widespread use of cryptocurrencies.
Status of Cryptocurrency Legal in India
To answer the central question, Is cryptocurrency legal in India in 2024? yes, cryptocurrency is legal in India. Individuals are allowed to buy, hold, and trade cryptocurrencies. However, these digital assets are not considered legal tender, which means they cannot be used for everyday transactions. The legal framework is still a work in progress, and while crypto is allowed, it is subject to various regulations, including strict taxation and anti-money laundering rules.
Risks and Future Outlook
While the status of, is cryptocurrency is legal in India? is clear, the risks associated with it remain. The market is highly volatile, and the evolving regulatory environment adds an extra layer of uncertainty.
That recently one of the major Crypto Exchanges, WazirX been hacked, and made users to suffer a lot. So Investors must be cautious and stay informed about the latest developments. That said, India’s growing interest in blockchain technology and the government’s recognition of its potential suggests that cryptocurrency could play a larger role in the country’s financial ecosystem in the future.
As of 2024, cryptocurrency legal in India is a reality, but with strict rules and regulations. While crypto is not banned, the government has implemented various measures to control its use, including taxation and compliance with anti money laundering laws. For now should be mindful of the legal and regulatory challenges that come with it. The future of cryptocurrency in India will depend on how these regulations evolve and how the government balances innovation with security.
Also read: What Is The Best Crypto Exchange In India for Beginners in 2024?
