Is cryptocurrency legal in India?

Is cryptocurrency legal in India?

Bitcoin, Cosmos, Ethereum, Binance Coin, Tron and Dogecoin are some popular cryptocurrencies in India. But do you know whether trading in cryptocurrency is legal or illegal in India? Let’s find it out in this post.

RBI circular dated April 06, 2018

Reserve Bank of India is the central bank in India. On April 06, 2018, the Reserve Bank of India issued a notification regarding “Prohibition on dealing in Virtual Currencies (VCs) or Cryptocurrencies”. As per the notification, the RBI had prohibited the entities regulated by RBI to deal in cryptocurrency. 

The prohibition included- maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/ sale of cryptocurrency.

Any entity that was already involved in the trading of cryptocurrency had to exit the relationship with cryptocurrency within three months from April 06, 2018.

The notification of RBI can be found here.

Judgment by Hon’ble Supreme Court of India

However, this circular was set aside by the Hon’ble Supreme Court of India in response to a petition filed by the Internet and Mobile Association of India. The decision was passed by the Hon’ble Supreme Court of India on March 04, 2020.

Also on May 31, 2021, the RBI clarified that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by referring to the RBI circular April 06, 2018 and the same was set aside by the Hon’ble Supreme Court of India on March 04, 2020 and hence the circular is invalid now.

Legal or Illegal

So from all this, it can be inferred that trading in cryptocurrency is still legal in India. However, since cryptocurrency is a de-centralised mechanism hence there is no regulator of cryptocurrency in India.

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