Are cryptocurrencies legal in India? And How Much Should You Invest?

Published 23 Jul 2021 by Radhika Aggarwal

Table of Content

  1. Is cryptocurrency regulated in India? The Reserve bank of India (RBI) steps in to clarify!
  2. No regulations in India? Still legal in India, how?
  3. What is the future of cryptocurrencies in India? Will the government embrace it?

Cryptocurrencies in India are all the rage these days. There’s no denying that they’ve given out-of-this-world returns in the last one year or so (even if you take into account the recent 30-40 percent fall).

Is crypto legal in India? And if it is, then how much should you invest in it? These are two questions that many Indians are trying to answer. Bitcoin and other cryptocurrencies have given super-normal returns in the last year or so (even if you consider the recent 30-40 percent fall). So, it’s natural for people to find ways to participate in this move.

Is cryptocurrency regulated in India? The Reserve bank of India (RBI) steps in to clarify!

Crypto-currencies are a new phenomenon in India, and the government is still trying to decide how best to regulate them. In 2018, Reserve Bank of India (RBI) banned crypto exchanges from operating out of India - but this was reversed by the Supreme Court two years later when they decided that Indian banks can’t stop transactions with these sites or take any other measure against them as it would be outside their jurisdiction (Reserve bank of India ban). These developments have had an uncertain effect on Indians who rely heavily on cryptos for trades. Now, there is no way for bank payments transferred using traditional currencies such as Rupees into Crypto coins like Bitcoin.

A FEW DAYS BACK, the Reserve bank of India (RBI) governor said that the central bank still has “major concerns around cryptocurrencies, which [they] have conveyed to the government. And, about investors, it is for each investor to do their due diligence and take a cautious and prudent call.”

Cryptocurrencies are not illegal. However, there are no regulatory bodies to care about and protect it, which leaves the cryptocurrency field open for abuse by thieves, scammers, and fraud projects with the only intent to crypto scam & run away with investor’s money.

Cryptocurrencies can be considered legal in India. There is no ban or prohibition from any government body, meaning that buying Bitcoin or any other cryptocurrency is not illegal in India. Hence, it’s easy for people to participate. But with no regulation means there are few protections. For example, if your cryptocurrency gets stolen, nobody cares since they have small value outside of the market price, and only a handful of stores accept them (most still accepting cash).

The lack of a regulatory framework in the cryptocurrency world means that investors are not protected and could lose their money if they invest. In addition, the unregulated nature of cryptocurrencies makes them a risky investment for people who don’t know what they’re doing or can’t afford to lose any more money after recent losses.

Avinash Shekhar, Co-CEO at ZebPay, said In a statement made exclusively to the CoinCrunch News podcast by Namish Shanghvi, he said: “Crypto isn’t illegal.” He went on to say that this new RBI circular confirms his right as an individual or start-up business looking for investment opportunities with other firms like ours who are making the trade of cryptocurrencies legally.

Not only Zebpay! Nischal Shetty, CEO of WazirX, said in a CNBC interview that it is totally legal to buy and invest in cryptocurrencies in India.

What is the future of cryptocurrencies in India? Will the government embrace !

government embrace

Cryptocurrency skeptics believe that governments and their central banks will not allow the dilution of their monopoly power over money. They argue this by saying there is good reason to believe that crypto-currency enthusiasts are wrong about the government’s intentions for accepting cryptocurrency in society since actions speak louder than words. On the other hand, proponents say they fear pushback from those with vested interests who do not want to see any change at all or don’t understand how it works - as seen before when telegraphs were introduced into homes despite vehement opposition because people thought it was an invasion of privacy; cars created traffic jams when first invented, and nobody wanted them on city streets, but now we can barely imagine life without them!

Apparently, the Indian government has been giving conflicting signals on this matter. Finance Minister Nirmala Sitharaman in March said that there wouldn’t be a total ban on the use of cryptocurrencies in India but soon after, plans to introduce legislation completely banning all cryptocurrency usage is announced by the Centre, and it’s still unclear what will happen as these laws are being debated at present.

There has been a flip-flop of sorts from different government bodies on cryptocurrencies. Aggressive investors can deploy up to 1-5% of their corpus in cryptocurrencies.

However, the cryptocurrency market is considered a high-risk and high reward market as of now. This is because of many reasons. One of the biggest reasons is that it isn’t mature yet. The stock/conventional market is approx 60 Trillion $ compared to crypto, which did not even hold the two trillion dollar mark for a few days!

If you’re looking at cryptocurrencies from an investment standpoint, be sure to invest what you can afford to lose since there may be many corrections cycles in this space.

Cryptocurrencies are not regulated in India by the government for now. Still, they are not banned also, meaning that buying Bitcoin or any other cryptocurrency is not illegal, so it’s easy for people to participate. But with no regulation means there are few protections - like if your cryptocurrency gets stolen, nobody cares since the authorities won’t log a complaint about your stolen cryptocurrency.

Keeping your cryptocurrencies safe by SelfCustody is your responsibility. But, unfortunately, I Don’t think the government will help just yet!

The cryptocurrency market is not regulated in India but in many other jurisdictions like the United States, where there are no regulations or guidelines for cryptocurrencies. Still, ironically 40% of global cryptocurrency users are from the United States. So we in India are definitely lagging in the number of users using cryptocurrency and startups.

With no regulations, there are only a few options to store your coins safely with self custody. At cxihub, we are coming with a wallet update by the end of this year that will allow users to keep custody of their coins & when the need for liquidity, users can use our CeFi Spot platform for unlimited liquidity.

Conclusion

Cryptocurrency is a digital currency, which you can trade on exchanges for other currencies. If you’re interested in investing in cryptocurrency but unsure where to start, cxihub offers all the help and guidance & trading tools necessary. Join our online community of like-minded people keen on adopting OpenFinance & have actively adopted crypto in their daily lives! Sign up at cxihub now or follow us on Twitter or Reddit to stay updated with what’s happening in this space.

Disclaimer*:- Trading in cryptocurrencies is subject to market and legal risks. Cxihub does not guarantee any returns. Use cxihub’s service at your own risk.

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