Cryptocurrency investment has gained global momentum within the recent decade. People now trade in different cryptocurrencies like Ripple, Zcash, Litecoin, Ethereum, Dash, and Bitcoin.
Out of all the cryptocurrencies mentioned above, Bitcoin seems to be the most popular. It was introduced in 2009, and is one of the earliest cryptocurrencies in the world.
Sometime before the banking ban was issued in 2018 by the Reserve Bank of India (RBI), trading in Bitcoins had begun to gain a lot of momentum in India. However, because of the ban and other new developments, investors seem somewhat reluctant to continue investing in Bitcoins.
Before we examine whether it is legal to invest in bitcoins in India, it is imperative to understand the concept of cryptocurrency and bitcoins.
What is Cryptocurrency?
Cryptocurrency is digital money/currency. Transactions made with this digital money are secured through the use of cryptography.
What is Bitcoin?
As earlier pointed out, bitcoin is a type of cryptocurrency. It is like virtual cash. Just like a computer file, Bitcoin is stored in a digital wallet app, which you can install on your smartphone or computer.
So, is it legal to invest in Bitcoins in India?
Sometime in 2018, the Reserve Bank of India (RBI) issued a banking ban, which directed that all entities regulated by RBI should not deal with, or provide any kind of service to an individual or business entity, that involves buying or selling of cryptocurrencies.
The RBI has also taken a bold stand to completely end the use of digital currency, because the agency considers the trade in digital currency as illegal.
At the legislative level, a proposed draft bill, Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019, has been submitted to ban all virtual cryptocurrencies in India.
To make matters more intense, imprisonment for up to 10 years with a fine of Rs. 25 crores has been proposed as the penalty to be meted against any individual or business entity involved in the trade or any activity related to virtual currencies.
These developments are merely at committee stage. There is no current law which outrightly bans Bitcoin trade in India. In fact, the Supreme Court has currently directed the government to formulate cryptocurrency regulation policies.
Thus, at present, people still legally invest in Bitcoins in India. Apps such as CoinSecure, ZebPay, and CoinDelta provide the exchange platform for trading in Bitcoin. An Indian based exchange, Unocoin, also provides the platform for trading in Bitcoin.