Legality of cryptocurrency in india

With the gaining popularity of cryptocurrency all over the world, most of the people has started investing their time and money in it. People from all over the world are investing money in these virtual currencies in anticipation of profits. Similarly, many people in India are also intrigued to spend their time and money in virtual currencies like Bitcoin, Dogecoin, Ripple, Ethereum etc. In India the apex financial institution is Reserve Bank of India, and RBI has identified cryptocurrency as a form of virtual currency that is formed by several computer codes, and it rely on encryption and therefore it is independent of being issued by any central issuing authority. It works through a blockchain technology that works as a person-to-person issuance and transaction system which uses public and private keys to make secure transactions.

Being an unrecognized and unregistered and unregulated market with a capability of over trillion dollars, India saw a massive increase in cryptocurrency exchanges all over the country. While the number of people trading in cryptocurrencies were increasing, there were several people who were taking advantage of it and were dealing in illicit activities through use of cryptocurrencies and activities like fraud and criminal activities had increased a lot. To prevent the illicit activities related to it RBI in 2018 issued a circular putting ban on all the commercial banks, finance banks, small finance banks and all kind of banks dealing in virtual currencies and to stop aiding the entities that were dealing in cryptocurrencies. Through this circular the trading of cryptocurrencies were put to stop in India. But the situation relating to cryptocurrency changed in 2020 when Supreme Court of India quashed the decision taken by RBI in 2018 based on Article 19 i.e., the freedom to practice any occupation, trade, or businesses. It was decided that the ban that was put by RBI was officially pulled, and the trade of cryptocurrency was allowed by this decision.

The Indian Government is now focusing passing a new bill related to the dealing and trading of cryptocurrency i.e., Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. This bill will deal with all the provisions relating to trading of cryptocurrencies and India is also planning on ban of all private cryptocurrency and will only focus on its Official Virtual currency that will be issued by RBI. It is still under discussion relating to which all currencies will come under private cryptocurrency. RBI has cautioned the public from trade in cryptocurrencies and the possible misuse of it and wants the people to invest in it very cautiously and after researching a lot about it. Also, relating to the latest developments in Companies Act, 2013 it is directed by the government that all the companies must list their dealing in cryptocurrency from the new financial year and to start showing their profits and loss transactions including cryptocurrency.

Based on the above facts and present scenario of cryptocurrency in India it is evident to say that the need for a proper rules and regulations relating to trade in cryptocurrency is of urgent need and with the passing of Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 it will make the scenario more clear and evident as to when and how a person should invest in virtual currencies and what is the best way to do trading in cryptocurrency.

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