- Is trading in Virtual / Crypto Currencies legal in India?
First and the most important thing is that **currently there is no LAW in the country related to Virtual currencies**. Indian Government and Reserve Bank of India (RBI) are still assessing the risks associated with Virtual Currencies. Earlier RBI had listed some of the risks that Virtual Currencies pose:
* As it is an electronic currency, stored in digital wallet, so it is vulnerable to losses arising due to loss of wallet, hacking, malware attacks, loss of credentials etc.
* There is no central agency through which virtual currency payments happen. Virtual currencies follow peer-to-peer approach for the transactions. In case of payment issues, absence of any central agency would make it difficult to address grievances.
* It is difficult to value such currencies and recent volatility has supported it. What if the value of such currency crashes? In that case, users would be exposed to huge loss.
* There are some legal and financial risks involved as virtual currency trading happens worldwide under various jurisdiction and legal systems.
* It is mostly used for illegal activities, such as, drugs and arms dealing, money laundering etc. Accepting it as a legal currency will further boost such activities.
**Reserve Bank of India (RBI) had already advised that it had not given any license to any exchange or company for trading in virtual currencies. If users, investors or traders are dealing with virtual currencies, then they would be doing at their own risk.**
After the recent surge in bitcoin prices (almost 21 fold in past 1 year), lots of Indians have opened trading accounts and it made Indian government and RBI more cautious. RBI repeated its warning on 5th Dec 2017 regarding risks involved with such currencies.
On Dec 13th 2017, Indian Income Tax department approached bitcoin exchange houses in Delhi, Pune, Bengaluru, Hyderabad and Kochi to detect any tax evasion by exchange customers. This exercise was also to detect any black money being laundered using bitcoins especially after Nov 2016’s demonetization drive.
It is not that Indian Government is totally against it. In May 2017, govt. sought public views on crypto / virtual currencies using MyGov app. According to a recent announcement by Arun Jaitley, India’s current finance minister, the Indian government doesn’t recognize virtual currencies (including bitcoin) as legal tender as of now.
[*LEGAL TENDER means currency must be accepted if offered in payment or debt. As virtual currencies are not legal tender in India, hence anyone can deny accepting such currencies.*]
But he also mentioned that government is working on “recommendations” to regulate the crypto currency.
**Even if crypto currency is not a legal tender in India but there are exchange houses in India to exchange bitcoins, such as: coinsecure, zebpay, unocoin and many more.**
There are definitely some risks involved with crypto currencies but similar risks are there with digital wallets as well. It is the owner’s responsibility to use strong passwords, two-factor authentication, have latest antivirus software installed etc. to safeguard their data.
Currently in India, all online monetary transactions go through a central agency but that doesn’t mean that this is the only way online payments should happen. Absence of central agency doesn’t mean that transactions are not safe, virtual currencies follow other secure methods and frameworks for online payments and surely RBI and other government agencies must be assessing it.
Every change, when introduced, faces some resistance especially in a country as diverse as India, but with time it is accepted and become part of our lives.
In my view, crypto / virtual currencies can't be avoided for long, what do you think?
- Date of publication:
- Sun, 12/17/2017 - 07:14
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