The confusing legal limbo of cryptocurrency in India
Cryptocurrency in India is neither legal nor illegal, a top economist has said.
Following an announcement from Narendra Modi’s government that they aren’t 100 percent happy with virtual currencies, the topic has always been a bit touchy. Last year, the country’s finance minister said they didn’t recognise digital currencies as legal tender.
The government has even warned against people investing in Bitcoin.
But in India, Bitcoin, and other cryptocurrencies, are not banned – or even regulated – yet.
Although the government has spoken about the dangers of investing in Bitcoin, without regulating them, they have put them in limbo.
Dr SP Sharma, chief economist at the PHD Chamber of Commerce and industry told the Economic Times of India that Bitcoins will always remain underground unless they are properly regulated and monitored by the governments of banks.
“Neither has the government formally brought bitcoin under the definition of currency, nor has it made it illegal,” he told the ET.
“It’s fair to say that currently the cryptocurrency is neither illegal nor legal in India.”
He added: “Unless the cryptocurrency is properly and comprehensively regulated and monitored by a robust institution, I don’t see bitcoin becoming a legal currency in India.”
We’ve seen that other countries have banned cryptocurrencies or made the move to regulate them but the situation in India is, frankly, strange.
It would seem the government itself is perplexed by the issue of cryptocurrencies. They even said last month after warning people about dealing with them that they are considering taxing them and has set up a panel to decide on India’s stand on cryptocurrency. Some banks have even taken to banning them in India. The Economics Times has reported that The State Bank of India, HDFC, Axis, ICICI and Yes bank have suspended accounts of Bitcoin exchanges, including accounts dealing in Zebpay, Unocoin, CoinSecure and BtcxIndia among others.
It is unsure what the next step for digital currencies will be for the country, where the number of cryptocurrency users is relatively small.
What is sure, though, is that until the government fully understands digital currencies, their status will continue to be a grey area.