Legality of Cryptocurrency in India.
Cryptocurrency is a digital asset, Unlike traditional currency which is issued by a central bank or administrator and has the involvement of governments in the regulating and issuance, cryptocurrency is a decentralized digital currency and is issued without a central bank or single administrator. The usage of cryptocurrency is recognized worldwide and individuals use it for peer-to-peer transactions for services and goods.
Cryptocurrency is recognized on par with traditional currency and its value is influenced by the demand and supply in the market. Cryptocurrency isn't physical in nature, and the storage of the units is done online as a digital currency on the digital wallet platforms or through Offline wallets also know as cold storages which don't have access to the internet such as drive, USB, computer devices as a measure for hacking or cybersecurity issues. Cryptocurrency is said to be the safest currency in the world as it is hard to decipher and can't be counterpart due to the usage of encryption of the codes which are unique and are hard to crack. The technology used for enabling and existing cryptocurrency is through blockchain. The details of cryptocurrency ownership records are stored in a public ledger existing in the form of a computerized database using strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership. Ownership records of the individuals are private.
The most popular cryptocurrency in the market is Bitcoin, which has gained momentum and traction over the years and is used worldwide for peer-to-peer transactions and as a payment method. The conversion rate of 1 Bitcoin in India currently is at 42,35,085.39. (20th March 2021).
What is the procedure for getting them?
Cryptocurrency is generated through mining a process where an individual can create them using the help of blockchain technology, it is a complex process and not everyone can do it. One needs an understanding of the technology and huge resources to do mining of the cryptocurrency.
Another option is purchasing them through bitcoin exchange and receiving them from someone else in exchange for goods and services.
Cryptomarket in India:
According to an article by Mint, As per industry estimates, around 10 million Indians hold cryptocurrencies worth around ₹10,000 crores currently. There are over 340 startups in India in the crypto space that are employing tens of thousands of people directly or indirectly.
Is it Legal to own cryptocurrency in India:
In 2018, RBI imposed a ban on banks from facilitating cryptocurrency transactions which kept the Indian Cryptocurrency industry in turmoil. The ban was overturned by the judgment of the Supreme Court of India, given on 4rth march, 2020 in the case of Internet and Mobile Association of India v. Reserve Bank of India, the court struck down the circular issued by Reserve Bank of India. The court as of the view that the restrictions imposed by the Reserve Bank of India on banks and other entities in regard to the trading of virtual currency is unfair and therefore declared the restrictions to be un-viable. Hence there is no regulation that currently prevents an individual from owning or trading bitcoin in India and it isn't an illegal offense and act.
But as part of the measure to regulate the cryptocurrency market in India, the government has proposed the Cryptocurrency and Regulation of Official Digital Currency Bill, it is an Act to prohibit the use of Cryptocurrency, regulate the Official Digital Currencies. Some key highlights of the act:
Sec 2(d) Digital Rupee means a form of currency issued digitally by the Reserve Bank and approved by the Central Government to be legal tender;
Sec 3. (1) No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use Cryptocurrency in the territory of India.
Sec 5. (1) The Reserve Bank may by notification declare any official foreign digital currency to be recognized as foreign currency in India to the extent specified in the notification.
Sec 5 (2) The foreign digital currency recognized as foreign currency in India shall be governed by such regulations as may be notified by the Reserve Bank under the relevant provisions of the Foreign Exchange Management Act, 1999 (Act No. 42 of 1999).
Sec 6. (1) No person shall directly or indirectly use Cryptocurrency in any manner, including, as,- (a) a medium of exchange; and/or (b) a store of value; and/or (c) a unit of account. (2) Cryptocurrency shall not be used as legal tender or currency at any place in India
With the rapid growth of the blockchain and crypto market in India, it would be interesting to see if the bill suggestions would be passed across and the existing users would be affected at large or would find relief with the new amendment bill.
Approved and Signed Report and Bill of IMC on VCs 28 Feb 2019.pdf: https://dea.gov.in/sites/default/files/Approved%20and%20Signed%20Report%20and%20Bill%20of%20IMC%20on%20VCs%2028%20Feb%202019.pdf CRYPTOCURRENCY MARKET: https://in.tradingview.com/markets/cryptocurrencies/prices-all/