Crypto Legality in India: Understanding Regulations and Rules

By Terry Ashton, updated December 16, 2024

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With so much written online about this topic, much of it contradictory or out of date, it can be hard to know where to look. As a trusted supplier of the latest crypto news, data, and information, we aim to clear things up once and for all. Specifically, we’ll focus on crypto legality in India. We’ll dive into the subject, highlight key viewpoints, and answer the pressing questions you’ve been asking.

A grey area for crypto currency

A quick Google search reveals a lot of misinformation and disinformation in the crypto space. What started as a democratized approach to personal finance has undergone a seismic shakeup in recent years, especially regarding crypto legality.

Sam Bankman-Fried, once the face of crypto-funded philanthropy, now sits in jail for years to come. His high-profile downfall has made many casual news followers suspicious of crypto coins. This is not without reason. The lack of regulation and the perception that the industry is too immature to correct its failings have deeply affected crypto legality in India. This has further confused the public’s understanding.

As a result, crypto in India sits in a grey area. Mainstream news often talks it down, while some online sellers try to boost it. We’re here to shed light on this grey area. This will help you clear up your own thoughts and decide how to take control of your money. We’ll first highlight a key distinction, especially regarding crypto legality in India and cryptocurrency regulation.

The difference between “legal” and “legal tender”

Crypto legality in India is one of the most confusing aspects of the subject, largely due to the subtle — and yet frequently glossed over — difference between something being “legal” and it being “legal tender.” A Rupee is legal and it is legal tender. A bicycle is legal but it is not legal tender. And nothing can be illegal but also be legal tender. This distinction is particularly important when considering the evolving landscape of cryptocurrency regulation.

For something to be legal, you must be able to own or use it without facing legal consequences. If the police can seize it and prosecute you for possession, it’s illegal.

Crypto legality in India often sparks debates, particularly when it comes to understanding what qualifies as legal tender. For an item to be legal tender, you have to be able to have it in your possession and, crucially, exchange it at the point you consume goods and services.

Legal tender refers to any means of making a payment between two people or businesses, and authorities must tightly regulate it to prevent fraud. This distinction plays a key role in discussions surrounding cryptocurrency regulation in the country.

Take a look at the recent high-profile political Bitcoin scam and you will see what happens when things are not checked and balanced. Politicians caught appropriating their campaign funds in ways that were less than transparent and traceable soon found out the difference between “legal” and “legal tender” and it is something that is crucial to note for all investors.

Crypto casinos in India

While India has not made crypto illegal, there are not any crypto coins that are legal tender at the time of writing this article. No matter whether or not you want to order online groceries, book sports tickets, or play on sites like indiacasinos.com, you cannot do so with the backing of crypto. But what about a casino that only accepts crypto and makes no attempt to exchange crypto for legal tender?

Crypto legality in India has led to interesting developments, such as the ability to place legal wagers with cryptocurrency in online crypto casinos. You will receive winnings in crypto, but you cannot exchange them for Rs or use them to buy groceries due to the government’s stance on crypto regulation.

Knowing that you can win (and lose) crypto coins in a legal online crypto casino is crucial when deciding how to play. As you explore this opportunity, choose a reputable, licensed crypto casino for added protection.

Building crypto into the legal economy

The government will not ignore crypto coins just because you can’t use them in conventional commerce. They recently enacted a 30% tax on gains made through crypto investments. The tax is paid out in Rupees, not crypto. The latest rules also state that taxpayers must include any crypto transaction between parties outside of India on their returns.

While you can’t use crypto to purchase goods or services, you can still profit from its growth. The tax department treats crypto as an appreciating asset, meaning you must declare it on your annual return, according to Indian guidelines.

Integrating crypto into the mainstream economy marks a first step toward making it legal tender. However, it is not enough. India may never follow El Salvador and make crypto legal tender in all aspects. While that would be a missed opportunity for innovation, it’s understandable that legacy institutions want to guard against it.

What does this mean for Bitcoin?

Every news follower has heard of Bitcoin. It has become a byword for the entire industry. Many casual fans use the terms MMA and UFC interchangeably, just as millions do with Bitcoin and crypto. While this works for brand recognition, it can make understanding the latest news tricky, especially when seeking legal perspectives.

The key point is that Bitcoin is treated the same as all other crypto coins in India. It is legal to own, but not legal tender. You can hold Bitcoin as an appreciating investment. You can also build a portfolio of coins to diversify how your money works. This helps you plan for the future by moving away from the mainstream. Many investors in India balance crypto investments with traditional options like bonds and property. This approach reflects the current crypto legality in India, where digital currencies are assets but don’t yet serve as a medium for everyday transactions.

Are all crypto currencies treated the same?

Yes, other coins like Ethereum are treated exactly the same way as Bitcoin is treated in India. The system is designed to be fair, transparent, and universal, ensuring that every investor and coin holder knows they can hold the coins as assets but cannot use them as legal tender.

The clear path set out by ruling institutions is making the grey area surrounding crypto more black and white. Paying tax on these digital assets when they appreciate is the first step to moving them away from opaque forms of appreciation and laundering. We champion the democratisation of crypto and believe this is a move every legitimate investor should support.

So…is crypto legal in India right now?

Yes, crypto is legal in India at the time of writing. There are no current plans for this to change in the near future. The industry is focused on regulating crypto as an investable asset. Tighter regulation will only protect coin holders in the short and long term.

While we hope crypto will one day become globally recognized as legal tender, we’ll wait to see how the world views El Salvador’s success. Could this small country become a global success story and a perfect use case for Bitcoin? Time will tell. It will certainly be fascinating to see. As we observe this, it’s important to note the evolving landscape of crypto legality in India. Authorities in India treat digital currencies as valuable assets, not legal tender, and they remain in a grey area.

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