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Is Bitcoin Legal in India?

By June 10, 2020November 21st, 20233 minute read

A crypto is a form of digital currency that works on cryptography, a technology used for securing crypto transactions. And when we talk about crypto, how come we don’t mention Bitcoin?

Bitcoin is one of the first crypto that came into existence and spread like wildfire. It has come a long way since its inception in 2009. It has been a booming, multi-billion dollar mining industry that powered the crypto’s underlying blockchain network. With multiple use cases and worldwide acceptance, Bitcoin is no longer a DIY project for hobbyists.

With Bitcoin’s exponentially growing popularity, there is ambiguity about the legality of Bitcoin and cryptos in general. Although a few countries have accepted Bitcoin as a secured medium of exchange, there’s still a long road ahead.

But what about India? Is Bitcoin legal here?

The short answer is: Yes, Bitcoin and other cryptos are legal in India. You can buy, invest, and trade without fear on WazirX.

Before we move forward, here’s a little overview of the journey to Bitcoin’s legality, which was long and pretty taxing. Let’s have a look at its journey in India.

The Court Battle

RBI released a circular on April 6, 2018, where banks were asked to sever business ties with crypto exchanges. This, in turn, unleashed a flood of Fear, Uncertainty, and Doubt (FUD) across the crypto ecosystem in India. Rumor-mongering and the spread of misinformation became rampant.

#IndiaWantsCrypto Movement

WazirX founder Nischal Shetty took it upon himself to clear the air by launching the #IndiaWantsCrypto movement through his X (former Twitter) profile.

Within a couple of months, it garnered the solid backing of the community, and the entire crypto community in India joined in. The movement completed 1000 days and was the dominant force behind quelling unnecessary noise around a supposed ‘Bitcoin ban.’ The campaign then moved on to push for positive regulations.

On the other hand, the Indian Mobile Association of India (IAMAI) and Nishith Desai Associates fought the battle in court.

The battle was won ultimately on March 4, 2020, when the apex court negated RBI’s ban. The crypto community commended Lawyer Ashim Sood’s efforts in representing India’s Bitcoin case.

Chronological Overview of Key Events in Bitcoin

Here’s a chronological overview of key events:

  • October–November 2017: The Supreme Court entertains multiple Public Interest Litigations (PILs) advocating for the regulation or prohibition of crypto transactions in India.
  • December 2017: The RBI and the Ministry of Finance issue statements likening cryptos to Ponzi schemes.
  • April 2018: An RBI circular prohibits commercial and cooperative banks, small finance banks, payments banks, payment system providers, and NBFCs from engaging with virtual currencies and offering services to entities operating in this domain. This restriction leaves crypto exchanges in a challenging situation without access to banking services.
  • May 2018: Some crypto exchanges filed a writ petition in the Supreme Court challenging the RBI circular.
  • July 2019: A committee submits a report suggesting a ban on “private cryptos” in India.
  • March 2020: The Supreme Court overturns the RBI’s banking ban on cryptos. While acknowledging that cryptos are unregulated, the apex court clarifies that they are not illegal in India. This verdict revitalizes the crumbling crypto market, leading to a remarkable 700% surge in Bitcoin’s value over the ten months from April 2020 to February 2021.
  • April 2022: A flat 30% tax on capital gains from crypto transactions came into effect, applicable to the ongoing financial year. This tax regulation introduces a new dimension to the taxation of crypto transactions in India.

So, coming back to the main question!

Is Bitcoin Legal in India?

Definitely YES! Engaging in the trading and investment of Bitcoin is permissible in India, given that the sector remains unregulated. However, it’s essential to note that Bitcoin does not hold the status of legal tender within the country.

There is speculation among crypto observers that the recent government initiative to impose taxes on crypto earnings might signify a step toward granting cryptos a form of legal recognition. Nonetheless, this remains speculative, and the actual direction of regulatory developments is yet to be determined.

One thing is certain about the future trajectory of Bitcoin: the path ahead is uncertain, yet the landscape is characterized by excitement, dynamism, and volatility. In navigating this evolving space, it is prudent to continue conducting thorough research (DYOR – Do Your Own Research) and approach the unfolding future cautiously.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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