Bitcoin whether legal in india

India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government.
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Those dreams ended last week, when reports of a draft cryptocurrency policy from the Indian government revealed the authorities were considering criminalizing anyone holding or trading cryptocurrency assets. Novice traders and investors like Tushar, many of whom bought cryptocurrency during the pandemic , are backing away from their investments out of fear of repercussion from the authorities. And professional traders, with cryptocurrency investments running into several millions, are considering moving to countries friendlier to their trade, like Dubai and Singapore.

If the current bill becomes law, India would be the first major economy to enact a strict ban on owning cryptocurrencies.


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The first strict measures against trading came in , when the government restricted the accounts of known cryptocurrency traders , a measure that was lifted in March In , the government drafted a bill that proposed a year jail term for cryptocurrency holders but never passed it into a law. In January, the government tabled a proposal that aimed to create a framework for an official digital rupee , a government-backed coin that would aim to replace private currencies by banning them in India.

The harsh precedent in April sent shockwaves through the ecosystem. Exchanges shut down , founders were arrested , and a brief market crash resulted. But the Indian cryptocurrency community, mostly individual traders and entrepreneurs, fought the restriction, which was ultimately overturned in the Supreme Court in March For over three years, year-old Keshav, who also asked to be identified only by his first name, has been a part-time trader.


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With an estimated 1. The Indian government has been skeptical of cryptocurrency, vacillating between wanting to regulate cryptocurrencies and banning. While the government wishes to actively encourage blockchain technology, it has been resisting popular usage of cryptocurrency because once the unit of account of one of these transactions changes from rupees to any cryptocurrencies, then the possibility of recovery of tax would become farcical.

So, if the government wishes to reap the revenues from blockchain transactions, it will have to recognise cryptocurrency, and not just INR, as a unit of account. A serious problem associated with crypto-transactions is that, because of the anonymity that it provides, it becomes a haven of sorts for criminals, enabling them to finance all manner of malicious activities.

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This trend is likely to increase in the future. With increasing law enforcement scrutiny on hawala transactions and formal banking systems, terrorists are likely to gravitate towards the anonymity of virtual currencies. Red flag indicators that financial institutions use to detect suspicious money laundering and terrorism financing activity do not exist for illicit transactions in the BTC blockchain. Many initial coin offerings have turned out to be scams.

Crypto scammers also engage in creating fake crypto wallets or fake altcoins, which are not even genuine cryptocurrency. Recently on December 11, a scam of nearly Rs 1, crore involving cryptocurrency trading through multiple exchanges came to light when the Enforcement Directorate ED arrested a cryptocurrency trader, who is a resident of Bhavnagar, Gujarat, and was being investigated in connection with an online betting racket involving Chinese operators. After a string of frauds were unearthed after the demonetisation move, the RBI, by way of a circular, prohibited any entity from providing banking services to anyone dealing with virtual or cryptocurrencies in April In his budget speech, the late Arun Jaitley stated that the government will do everything to discontinue the use of bitcoin and other virtual currencies in India, but will focus on the distributed ledger system or blockchain technology that allows organisations to record and authenticate transactions without the need of intermediaries.

In the face of plummeting trade volumes, cryptocurrency exchanges filed a lawsuit in the Supreme Court and won the case in March A three-judge bench of the Supreme Court overturned the central bank ban, noting that the RBI had not presented any empirical evidence that virtual or cryptocurrencies have negatively impacted the banking sector or other regulated entities.

“I have to pull out everything”: India’s cryptocurrency community braces for a sweeping ban

But there is none. There is no denying that a robust interest in India for crypto-assets. Despite government efforts to reign it, the demand and popularity for cryptocurrencies has grown steadily In India. Crypto-currency is the generic name given to virtual currency.

India to propose cryptocurrency ban, penalising miners, traders - source | Reuters

It is used as a digital asset designed to work as a medium of exchange. They work using blockchain which is a decentralized technology spread across many computers that manages and records transactions.

“I have to pull out everything”: India’s cryptocurrency community braces for a sweeping ban

There are different types of crypto-currency traded publicly, according to CoinMarketCap. None of these crypto-currencies are issued by the central bank of a nation. In December , the RBI had cautioned the users about the risks of virtual currencies for the very first time.

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It had said that their value is a matter of speculation and not underpinned by an asset or good. Since then, things have changed dramatically. It also drafted a bill banning all crypto activity in the country, punishable with fine of up to Rs 25 crore or with an imprisonment term of one to ten years, or both. RBI also suggested that it plans to bring a digital version of the Indian Rupee and "was exploring the possibility as to whether there was a need for a digital version of fiat currency, and in case there was then how to operationalise it.


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