Cryptocurrency has gained a lot of popularity among the Indian users in the recent years. They have not only been used for investments but also for transactions around the world. The cryptocurrencies works on blockchain technology that provides security and transparency. However, multiple countries are still figuring out the working of the cryptocurrencies and making new rules and regulations on its trade.
Cryptocurrency is unregulated in India and is not accepted as a legal tender. The legal status of crypto in India is still complicated. At the same time, there are many neighboring countries which have banned cryptocurrency. However, the Indian government has not banned cryptocurrency.
Key Takeaways
- Current status and legal position of cryptocurrency in India.
- Knowing on whether crypto mining is legal in India.
- Obtaining idea about the present legal status of cryptocurrency in other countries.
- Learning whether a ban on cryptocurrency will harm blockchain technology in India.
What is Cryptocurrency?
Cryptocurrency is a digital currency that utilizes different encryptions to regulate the creation and transfer of units. It operates independently from the financial institutions and allows the users to interact with each other directly. While cryptocurrencies are volatile, some people view them skeptically due to the high opportunities that it provides for businesses to increase profits.
One main feature of cryptocurrency is that it works on blockchain technology. It has revolutionized how people think about data storage, security, and transaction management. It is decentralised and offers transparency. Cryptocurrency in India also works in the same manner but there is no regulations over them.
There are different exchanges that allows the traders to trade or invest on the cryptocurrencies in India. But, the government has been making new rules and regulations to regulate the working of the cryptos in India. But, there is no ban on this currency as of now.
Differences Between Cryptocurrencies and Legal Tenders
Legal tender, in most countries, is the fiat currency. And so in India, a legal tender is the Indian Rupee. It is the currency issued by the government and are used by the citizens for the purchase and selling of goods and services.
On the other hand, crypto is not issued by the government. It operates to a large extent but independently. Bitcoin is the most famous cryptocurrency in India, and it emerged in 2009. Since crypto is not issued by the government and is not a legal tender, it is also not used as a mode of payment in India.
Legal Position of Cryptocurrency in India
A legal tender is a medium for exchange used to settle transactions. When there is a legal tender for a currency, it means that it can be used for settling debts. The currencies which have a legal tender are backed and supported by the government.
While talking about the cryptocurrencies, we are aware of the fact that the traders virtually use cryptocurrencies for investments and transqactions but as of now, there are no legal tenders for cryptocurrencies in India. This means that the traders cannot use Bitcoin or any other form of cryptocurrency for making payments and settling debts in exchange for any goods or services.
However, cryptocurrency is taxed under virtual digital assets by the Indian government. The government is aware of the fact that virtual digital assets are a part of both Indian as well as the international economy. While cryptocurrency is not banned but they are charged with a 30% tax as announced in the Union Budget of 2022.
However, the taxation of cryptocurrencies certainly does not make them a legal form of currency in India. Also, there aren’t any rules or guidelines stated by the government regarding the working of cryptocurrencies in India. People who trade with cryptocurrencies are still looking forward to the government looking into this matter and releasing a bill that legalizes cryptocurrency as a payment mode and allows transactions and mining of cryptocurrencies in India.
Is Crypto Mining Legal in India?
Unlike China or other countries, India has not brought any regulations to ban the virtual currency in India. Also, given the fact that public cryptocurrencies can be mined using one’s own equipments, they do not interfere with the current rules and laws of the government.
Is Blockchain Technology Legal in India?
Blockchain technology is as legal as any other evolving technology like Machine Learning or Artificial Intelligence. Even, one of the Indian States, Andhra Pradesh is reported to have built its own blockchain based platform for the management of their land records. The government of Maharashtra is also making efforts and looking into this technology that could enhance their efficiency for e-governance.
Will Crypto Ban Harm Blockchain Technology in India?
Yes, a ban to cryptocurrency in India will also have an adverse effect on the Blockchain technology in India. In that case, the developers have to pay transaction fees for building applications on blockchain. The transaction fees have to paid in the respective token of the blockchain.
For an instance, to build on the Ethereum blockchain, the users have to pay using the native coin Ether to validate the transaction. Building a particular cryptocurrency or the payments through that currency would mean not being able to build on the platform from the Indian banking sector viewpoint.
Legal Status of Cryptocurrency in Other Countries
The blockchain technology and cryptocurrency is not only new to India but to different other countries as well. Different countries have their own set of guidelines and laws that regulates the use of cryptocurrency. And some of them are still figuring out how they work and how to regulate them.
Numerous countries, including the USA, the United Kingdom, and some other European countries, have legalized the status of cryptocurrency for payments. However, they have yet to release guidelines for trading cryptocurrencies. Only two countries have given legal tender to cryptocurrency.
While trading and transactions using cryptocurrency is legal in numerous countries. But, they do not allow its use in the banking segment. On the other hand, some countries like Egypt, China and Nepal have completely banned the use of cryptocurrency. This includes holding, trading or investing on cryptpocurrencies.
Conclusion
Digital assets, including cryptocurrencies and NFTs, are undeniable aspects of the Indian and international economy. A wide range of transactions are done using cryptocurrencies. While it remains unregulated in India, the government should understand the importance of cryptocurrencies and legalise them for transactions and payments.
The government should also work on releasing a set of rules and regulations to control the working of the cryptocurrencies in India. While trading on cryptocurrency is allowed in India through the crypto exchanges. But a tax of 30% is applied on the transactions which is too much. But, with the status of legal tender not given, it should be legalised as soon as possible.
Besides, if you are willing to trade on cryptocurrencies, you can do so from Mudrex. The platform has its own application on the Google Play Store and follows all the regulations related to crypto trading. Download the app from Play Store now and start trading on your favorite crypto.
FAQ
- What are the differences between the legal tenders and cryptocurrencies?
The cryptocurrencies are digital assets which are based on the blockchain technology. They are unregulated and decentralised and is not controlled by the central authority. The legal tenders are government issued currencies like the Indian Rupees. Cryptocurrencies can be used for cross-border, and even anonymous transactions while the legal tenders are regulated currencies and widely accepted as a legal mode of exchange for products and services.
- Is it safe to invest on the cryptocurrencies in India?
Like any other investment, cryptocurrency is also a risk free and safe mode of investment. However, the cybersecurity threats, the regulatory risks and market risks are not controlled or regulated by thye government. If there is any potential harm to the crypto assets owned by the users, it is their own responsibility and the government won’t take any responsibility for the same.
- Can I buy Bitcoin for 1000 Rupees?
Yes, the traders can purchase a fraction of Bitcoin valued at 1000 INR. However, they can be purchased only through the crypto exchanges. There are different crypto exchanges and Mudrex is one among them from where you can purchase 1000 INR equivalent of Bitcoin.
- Does Cryptocurrency have a legal tender in India?
No, cryptocurrencies do not have a legal tender in India. They are decentralized and unregulated and traders can invest on the cryptocurrencies. But, they cannot use crypto for payments in exchange for goods and services.
- What does Indian government say about Crypto?
The cryptocurrencies are virtual digital assets which are unregulated as well as not prohibited. The investors or the traders are allowed to hold or invest in cryptocurrencies but they cannot make any transactions using the same.
