cryptocurrency

Is cryptocurrency legal in India? How can you invest in cryptocurrencies? – CNBCTV18


About 100 million Indians own cryptocurrencies, according to a recent study by BrokerChoose, making India’s crypto userbase bigger than any other country’s in the world.

With investors taking to crypto with such gusto, the big question to ask is: is cryptocurrency legal in India?

The answer to that question depends on whether we are talking about owning cryptocurrencies or hoping to use it as legal tender.

Owning cryptocurrencies

At the moment, there is no legislature that covers cryptocurrencies in India. But this doesn’t mean that owning cryptocurrencies is illegal.  It simply means that in the absence of a robust legislative framework, crypto owners may not be able to necessarily enjoy the same level of safeguards that owners of other asset classes do. For instance, in the banking system, the RBI has appointed an ombudsman who you can approach if you have a grievance with your bank. This may not be possible in the crypto space.

Even in the absence of a policy framework, cryptocurrency exchanges such as WazirX have developed robust systems that allow people to buy and sell cryptocurrencies in a seamless manner.

The massive spike in the price of the cryptocurrency has led to an increase in the number of crypto owners in India, as mentioned at the start of this article. Over the past one year, trading volumes on Indian cryptocurrency exchanges has increased from $200 million to $40 billion.

However, the lack of regulation surrounding bitcoin may change soon, as the government is set to table a cryptocurrency bill in Parliament. Media reports had previously indicated that the government was keen on banning cryptocurrency altogether, given the anonymous nature of its transactions. But Finance Minister Nirmala Sitharaman has pledged that the government will keep an open mind with respect to cryptocurrencies, given that it offers the scope for several promising innovations.

Experts say that the government may recognize cryptocurrency as an asset, like real estate, stocks or gold. This means that the government may levy capital gains tax on any profits made after selling cryptocurrencies, just as one does after selling real estate or stocks.

Cryptocurrency as legal tender

Even if the government recognises cryptocurrency as an asset, it is unlikely to accept it as legal tender.

This means that you cannot walk up to a restaurant, have a meal and expect to pay in bitcoin. Of course, some commercial establishments can and have started accepting payments in cryptocurrencies, but such a decision is purely their own and cannot be forced upon them.

This also means that you cannot go to a bank, and ask for your cryptocurrency to be converted into rupees. Such a transaction can only take place at a cryptocurrency exchange, where willing buyers and sellers exchange cryptocurrencies for rupees.

So far, only a few countries have accepted or are considering accepting cryptocurrencies as legal tender and the list is expected to remain small.

But countries such as China or even India have toyed with the idea of launching central bank digital currencies (CBDCs), which will be similar to cryptocurrencies, except they will be centralized in nature, and will be backed by the country’s central bank.

The upcoming regulation on cryptocurrency in India may usher in such a CBDC, which is expected to be named Lakshmi.

How can you invest in cryptocurrencies in India?

Billions of dollars of trading is taking place every day through various crypto exchanges that serve the Indian market.

You can choose any of the crypto exchanges to start investments in cryptocurrencies and benefit from high returns in this new asset class. Here are the top crypto exchanges serving the Indian market:

  • CoinDCX
  • CoinSwitch Kuber
  • ZebPay
  • UnoCoin
  • How to invest through crypto exchanges?

    Buying and selling cryptocurrencies through crypto exchanges is both easy and simple. It takes a few steps to set up your account and get started. You can finish the process in about 5-10 minutes. However, you can start trading only after your KYC credentials are verified by the exchange.

    Although the cryptocurrency trade in India doesn’t fall under any existing law, exchanges follow KYC norms to ensure the medium is not used for activities such as money laundering.

    Here is a step-by-step guide to investing in cryptocurrencies 

  • Visit the site of a crypto exchange such as WazirX
  • Register yourself with your email id and create a password
  • You may choose another layer of authentication safeguards
  • Provide your KYC details and wait for its verification and approval
  • Your registration will be instant though it may take 1-2 days for approval
  • Once approved, transfer funds to your exchange wallet and start trading
  • Summing up

    Crypto exchanges have an easy and intuitive user interface, allowing you to register and start trading without needing anyone’s support. The process can be completed in a few minutes, and you may start trading the same day. However, like all investments, trading in cryptocurrencies is subject to market risks. To be on the safe side, you should invest only as much as you can afford to lose.

     

     



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