India is looking for a middle way on cryptocurrency, as it finalizes legislation on virtual assets to be introduced in this winter session of Parliament. A government already said that an outright ban on crypto will be not viable given the large investments by Indians in such instruments. And allowing these unregulated virtual currencies as legal tender will be not right for the economy as well. A balance has to be found. A final call on the modalities of the law will be taken shortly. It is possible that the government will choose a middle way to balance the concerns of all stakeholders.
Nearly 100 million Indians own cryptocurrencies, as per a recent Broker Choose study, making India's crypto user base larger than any other country in the world. With investors flocking to crypto with such enthusiasm, the big question is: Is it legal to buy cryptocurrency in India?
The answer depends on whether we are talking about owning cryptocurrencies or hoping to use themes of legal tender.
Till now, there is no legislation covering cryptocurrencies in India. But that doesn't mean that owning cryptocurrencies is illegal here.
This simply means that in the absence of a strong legislative framework, crypto owners may not necessarily be able to enjoy the same level of security measures that owners of other asset classes do.
However, there are some cryptocurrency exchanges like WazirX, which have developed robust systems that make buying and selling of cryptocurrency in India hassle-free. The government is planning to introduce a cryptocurrency bill in Parliament.
There is nothing to worry about as Finance Minister Nirmala Sitharaman has promised that the government will keep an open mind with regard to cryptocurrencies, noting that it offers scope for many promising innovations. But we cannot reach any conclusion before the introduction of the bill.
Governments may recognize cryptocurrencies as assets such as real estate, stocks, or gold. This means that the government can impose a capital gains tax on any gains made after selling cryptocurrency, just as one does after selling real estate or stocks.
Even if the government considered cryptocurrency as an asset, there is no chance that the crypto will be accepted as legal tender. In other words, Crypto will not get the status of a Currency that can buy or sell things.
Thus, very few merchants will take payment in cryptocurrency. These will also not get the support of banks and other such institutions.
Till now, only a few countries have accepted or are considering accepting cryptocurrencies as legal tender and the list will remain the same. But countries such as China or India have toyed with the idea of launching central bank digital currencies(CBDCs), which would be similar to cryptocurrencies except they would be decentralized in nature and will be backed by the country's Central Bank.
Thus, for now, buying cryptocurrency in India is not illegal, you can invest, stake, hold, and exchange freely without any worries. However, there are a few things you should take care of while performing all these activities. Some major ones are mentioned in this article as well.
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