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Is Crypto Illegal ? Understand the Crypto Laws of India

22 Dec 2021 By : Rohit Khandelwal
Southeast Asia’s Lar

Is Crypto Illegal

There are many questions relating to the future of cryptocurrency. The first and foremost amongst them is “ISCRYPTO LEGAL”.

We will try to discuss a number of aspects of the same in the article covering the present set of regulations, the inherent limitations to regulating the cryptocurrency, and the concerns driving the Government in preparing a regulatory framework for the same.

Crypto Currency-Legal Framework

The legality of cryptocurrency is not yet defined by most countries there may be several reasons behind the same:

  1. There is no legal structure behind the operation of cryptocurrency

  2. There is no government backing the cryptocurrency for its valuation and other economic aspects

  3. Cryptocurrency is not regulated or defined by any law, rules, or regulations which can define a set structure, framework or set of rules by which the value or the capitalization and the reason behind the same can be determined at any given point in time

  4. The Meme Coins, another form of Cryptocurrency, is not backed by any economic activity or a fundamental business, making it a purely speculative currency asset

The above-mentioned points clearly indicate that cryptocurrencies are wild horses running in the jungle without any control. Nobody knows when this horse will stop running, or when it will pick up speed to rise to a substantial valuation.

Also, in the absence of a regulatory framework, there may be a number of frauds and illegal transactions which shall come back to haunt investors later on.

Technology Involved

The key technology involved in the functioning of cryptocurrency is the blockchain concept. In simpler words, blockchain technology is a peer-to-peer network of computers (called nodes), which are connected to each other and function simultaneously on the validation of any transaction happening in the transacted Ledger off the given cryptocurrency.

This makes cryptocurrency very safe from hacking and theft or even stealing. however, blockchain technology is an independent technology on which there is no government control or regulation as of now. This makes cryptocurrency a highly liquid monetary asset on which there is no government control.

Thus it can be safely said that although the cryptocurrency is secured to use in the absence of any garment racking or regulation, it becomes a risky proposition to follow.

But the question is, “If we cannot control something should we call it illegal?”

“Should Crypto Currency be Illegal?”

Recognition of Cryptocurrency

Till now only a handful of countries have recognized cryptocurrency as a monetary asset. A few of them are Japan, Canada, and a few other countries. Even The US, where the maximum number of crypto cryptocurrency companies are located, and which holds the maximum investment in cryptocurrencies, still does not have a well-defined regulatory model, except a taxation structure, to govern the free-flowing market of cryptocurrencies.

A majority of countries are yet to decide on the future of cryptocurrency as a legal asset. This is primarily because of the reason that the transactions are not happening under the tight vigil and control of the government authorities.

Although this does not make cryptocurrency illegal, there is a lot of ambiguity on the transactions related to the same, and hence the governments are yet undecided on the fate of cryptocurrency.

Government Control on Cryptocurrency

Although many governments and their finance departments are keeping a close watch on the developments happening in the field of cryptocurrency, they are still not able to make a framework governing the same and bring it under some kind of regulation.

In the absence of the same, the government is not able to regulate or control the cryptocurrency, and hence the government till now Isundecided on the future of cryptocurrency and the legalization of cryptocurrency.

Although cryptocurrency is not termed illegal, except for a few countries like China, the same is not yet termed legal also.

This ambiguity is keeping everyone in the dark about the future of cryptocurrencies.

In India also the same status prevails. Although the government and the regulatory authorities are working hard to come up with a defined regulatory structure governing cryptocurrencies, the same has not yet taken shape because of the inherent limitation due to the embedded secrecy in the cryptocurrency data and transactions happening with it.

In the last month itself, the government has held more than 4high-level committee meetings to decide upon the future of cryptocurrencies. It is being speculated that in the winter session of the parliament of India, a bill regulating the transactions governing cryptocurrency may be tabled.

Regulation

Even in countries where cryptocurrency has been accepted as a financial asset, there is a lot of ambiguity regarding the treatment, taxation, and regulation of the cryptocurrency, to date.

The regulation on the transactions happening in cryptocurrency is bound to come, but the same may take some time till the government is equipped to take the check to keep a check on all the possible forms in which cryptocurrency transactions may happen.

Although, if we go by the law, just by including cryptocurrency in the definition of the financial asset, regulation me directly be brought upon the transactions happening. This move will have the following impact:

  1. everybody will be liable to report any purchase or sale made of the cryptocurrency
  2. any transaction happening by means of a cryptocurrency will also be reported
  3. this shall also bring under regulation the payments made using a cryptocurrency to any third party

These rules will bring about a primary regulation giving the government an axis and control over the flow of cryptocurrency and the transactions happening in the same.

This may result in the show of keeping a check on the floor of cryptocurrency between different parties but the use of cryptocurrency for other purposes or illegal activities is yet undetermined. This may make cryptocurrency illegal.

One of the primary roles of any government is also to keep in check all sorts of fraud and illegal activities. We are all aware that cryptocurrency is a preferred medium of payment for illegal activities on the dark web. This makes the government even more cautious about accepting the legal status of cryptocurrency because then the floodgates will open for anyone to buy a crypto asset and use it for payment for illegal activity.

Again, any fraud or theft happening of cryptocurrency cannot be controlled and regulated by the government yet because of the inherent limitations in the usage of technology.

Dispute Resolution

Also, the disputes arising out of the transactions happening in cryptocurrency are beyond the control of any government. The same is because of the reason that the transaction happening in cryptocurrency is not recorded under any regulation or is governed by any statute. This makes the intervention of government in matters of dispute even more difficult because there is no set rule that allowed the platform to confirm the free and fair transactions happening in cryptocurrencies.

But does all of it makes cryptocurrency Illegal?

Conclusion

It can be safely said that although the cryptocurrency is not yet legalized same is still not illegal also.

In order to deal with cryptocurrencies, one should exercise extreme caution and should only use recognized exchanges and advisors. www.coingabbar.com is one such platform that provides free and unbiased opinions on all aspects relating to the crypto world.

WHAT'S YOUR OPINION?