Many of you have heard about bitcoins and the recently booming dogecoins. What are they? Are they legal in India? Find out by reading on.
What is Cryptocurrency?
Cryptocurrency is just digital money. It is considered to be more secure than real money. This is because cryptocurrency uses cryptography to secure its transactions.
Cryptography is a method of converting readable data into complicated codes which are tough to crack. Cryptocurrencies are classified under digital currencies, alternative currencies, and virtual currencies.
The first-ever cryptocurrency was Bitcoin, created in 2009. Since then, there have been many cryptocurrencies, namely Litecoin, Ethereum, Zcash, Dash, Ripple, Dogecoin, etc.
In India’s attempt to go cashless, cryptocurrencies have become popular, and more and more people are investing in the modicum of digital currency.
Is It Legal In India?
The simple answer to the question above is no. The slight caveat to it is that it is unregulated in India.
No set rules, regulations, or guidelines have been laid down for resolving disputes that could arise while dealing with cryptocurrencies. Hence, crypto transactions come with their own set of risks.
At the height of the investor boom in 2017, The Finance Ministry released a statement in 2018 saying:
“The Government does not consider Cryptocurrencies “as Legal Tender or Coin” and will take all measures to eliminate the use of these Crypto Assets in Financing “Illegitimate Activities” or a Part of the Payment System The Government will explore the use of Blockchain technology proactively for assuring in Digital Economy.”
What we can take away from the above statement is that the government is not against the usage of cryptocurrency, but just wants to prevent its wrong usage using blockchain technology.
In an interview by Financial Express, Nischal Shetty, CEO, WazirX, stated that Bitcoin is the alternative asset class. It has survived two global recessions.
He stated, “Like gold, cryptocurrencies are seen as a hedge to protect Fiat portfolio, and its value as a hedge lies in its inflation-beating qualities. Traditionally, investors used gold to hedge against stock volatility.
But today, crypto is slowly emerging as a mainstream investment class especially among millennials. Moreover, buying Bitcoin is absolutely legal in India, there is no law prohibiting Indians from buying/selling cryptocurrencies in India.”
Neeraj Dubey, Partner, Corporate Law Practice at Singh & Associates, states to FE online, “Section 26 of the RBI Act states that, ‘every banknote shall be legal tender at any place in India in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government’.
The virtual currency is not guaranteed by the Central Government, so, in order for any virtual currency to be declared legal tender, it will have to be expressly guaranteed by the Central Government.
In that case, parties are legally bound to accept it as a mode of payment. So, privately issued cryptocurrencies would not be safe.”
I have presented the testimonials of cryptocurrency being an exciting prospect in India and the legal pitfalls of it. Let us know your comments down below.
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