The Legality of Bitcoin in India

Similar to most countries in the world, there is no law against cryptocurrency or its usage in India. That can only be seen as a positive aspect for future Bitcoin adoption growth, though, considering how consumers are skipping credit cards and going straight to mobile and peer-to-peer payment solutions.

However, that does not make Bitcoin legal by default, as no law against something doesn’t mean it is acceptable to do a particular thing. Governments all over the world are trying not to ban Bitcoin in their country, as it would stifle FinTech innovation. No one wants to be left out in the future financial services and technology arms race, and cryptocurrency plays an integral part in that process.

While most countries have a law specifying which entities can create currencies, things are a bit different in India. There are certain guidelines as to who may issue legal tender and bank notes although neither of these terms has been clearly defined. Moreover, there is no clear-cut definition of a “currency” in the country, which leaves a lot of wiggle room for cryptocurrencies such as Bitcoin.

So where does this leave Bitcoin in the country? There is no definitive answer to this question, as it can be either currency, a good, a commodity, a payment system, or a pre-paid instrument. Or to be more precise, it could end up being none of the above either, as there is no clarity regarding the definition of any of these terms.

To make matters even more confusing, there are still a lot of regulatory concerns over Bitcoin. Cryptocurrency is often associated with anonymity, even though KYC and AML regulations apply to Bitcoin companies. Taxation of cryptocurrency in India will be a different discussion, though, as it would require central and state governments to decide whether or not Bitcoin is subject to taxes in the future.