There is no full legal backing for cryptocurrencies, including Bitcoin, in India, but it is becoming more popular in India. Through the 2018 circulation RBI He advised all entities regulated by it not to process cryptocurrencies or provide services to facilitate individuals or entities in dealing with their payments. However, the Supreme Court set aside RBI Circular on March 4, 2020. Since then, cryptocurrencies have been one of the most talked about investment options. However, there are concerns that the government may legally ban cryptocurrencies currently being traded. Officially, the government does not consider cryptocurrencies to be legal tender.
In response to a question at Rajya Sabha last week, Finance Minister Nirmala Sitharaman said: Of the payment system. “
However, the finance minister said the government would actively consider using blockchain technology to lead the digital economy. She said a high-level inter-ministerial committee (IMC) recommends banning all private cryptocurrencies in India except those issued by the state. “The government will make decisions on the IMC’s recommendations, and if there is a legislation, it will be submitted to Congress in due course,” Sisaraman said.
Despite the legal status of cryptocurrencies or cryptocurrencies, retail investors across the country are excited about the outlook. To give them a clear picture, we talked with some experts about risk, security, legal status, and insights into the anticipated future of Indian cryptocurrencies.
Is it safe to invest in cryptocurrencies from India?
Bitcoin is a new alternative asset class, according to WazirX CEO Nischal Shetty. It has been around for over a decade and has withstood two global recessions. “Like gold, cryptocurrencies are considered a hedge to protect Fiat Its value as a portfolio, and as a hedge, is its nature to defeat its inflation. Traditionally, investors have used gold to hedge the volatility of equities. But today, cryptocurrencies are gradually emerging as the mainstream investment class, especially among millennials. In addition, the purchase of Bitcoin is absolutely legal in India and there is no law prohibiting Indians from buying / selling cryptocurrencies in India, “Shetti told FE Online.
It is true that buying cryptocurrencies in India is not illegal. However, it does not legally guarantee the safety of the investment amount as it does with ordinary investment methods.
Neeraj Dubey, a partner in corporate law practice at Singh & Associates, believes that privately issued cryptocurrencies are not secure.
“Article 26 of the RBI Act states that” all banknotes are fiat currency and guaranteed by the central government, taking into account payments or the amounts stated therein, anywhere in India. ” Stated. Cryptocurrencies are not guaranteed by the central government, so they must be explicitly guaranteed by the central government in order to be declared fiat. In that case, the parties are obliged to accept it as a payment method. Therefore, privately issued cryptocurrencies are not secure, “Dubey told FE Online.
Dubey warned people about the risks of dealing with cryptocurrencies, stating that cryptocurrencies are not valid fiat currencies in India, and revealed that cryptocurrencies have no regulatory protection in India. Said.
The RBI also warned of potential financial, operational, customer protection, and legal risks associated with cryptocurrencies.
Dubey points out a notice issued by the Treasury, stating: “The risk of the type of investment bubble seen in the Ponzi scheme is realistic and increasing, which can suddenly and long-term crash investors, especially individual consumers, to lose hardware.-Money earned. Consumption One must be careful and very careful not to be trapped in such a Ponzi scheme. “
Some other risks that cryptocurrencies may be exposed to include hacking, lost passwords, malware attacks, and many other risks that can lead to permanent loss of money for users. Includes electronic / digital format storage.
“These transactions are online and encrypted, so they are illegal, such as terrorist financing, smuggling, drug trafficking, and other money laundering activities, which users with limited knowledge may or may not know. It’s also vulnerable to destructive activity, because these transactions are fully encrypted, “Dubey said.
Shetty believes that cryptocurrencies will become mainstream faster as more retail investors and first-timers enter the market in the coming months.
Should I invest despite the risks?
If you want to start investing in cryptocurrencies even after knowing all the risks, Shetty, as a first-time cryptocurrency, the most important thing you should keep in mind is that cryptocurrencies are high risk, high rewards It suggests that it is an investment option.
“After due diligence on a project, you should invest based on your risk appetite, and we recommend that you use a legitimate exchange that complies with the KYC and AML guidelines. As in any other industry. It’s important to be aware of the money fraud and those who promise to double their investment, “says Shetty.
What is the current legal status of cryptocurrencies in India?
Shetty said there are currently no cryptographic restrictions in India. However, buying Bitcoin is absolutely legal in India. There is no law prohibiting Indians from buying or selling cryptocurrencies in India. He said there was a bank ban between July 2018 and March 2020 because the crypto exchange was unable to hold a bank account. However, the Supreme Court of India lifted the bank ban in 2020. As far as the WazirX platform is concerned, Shetty said it is part of India’s Internet and Mobile Association (IAMAI). “Currently we are working on the code of conduct of Indian cryptocurrency companies.”
All private cryptocurrencies banned in India?
Mr Duvey said the Treasury Department’s Department of Economic Affairs has formed a committee to study issues related to cryptocurrencies and propose specific actions to be taken. The Commission has released a February 28, 2019 report recommending a ban on all private cryptocurrencies except state-issued cryptocurrencies.
Following the proposal, to clarify, the cryptocurrencies and regulations of the official digital currency bill of 2021 (“ODC bill”) created a facilitative framework for the creation of official digital currencies issued by the Reserve Bank. Proposed for the purpose of banning all private cryptocurrencies in India (“RBI”) and India. However, it supports and uses the underlying cryptocurrency technology.
Mr. Dubay proposed to the Central Board of Indirect Taxation, suggesting that the Central Economic Information Bureau, a division of the Ministry of Finance, could conduct a study to impose GST on cryptocurrencies and treat cryptocurrencies as liquid assets. And GST charged the margins made in that transaction.
Why are cryptocurrencies so popular in India?
According to Shetty, the RBI ban was under-researched and an arbitrary move. He states: “We challenged the move in the Supreme Court, and the court lifted the ban on banks. Bitcoin is gradually emerging as a mainstream investment class, especially among millennials. A large number of WazirX users. Many are under the age of 30. Young people are seeing crypto as an alternative investment option and are increasingly participating here. Bitcoin is called digital gold by many and is superior to gold in some respects. It is considered to provide a high degree of accessibility and allow anyone to send and receive Bitcoin without permission. “
Dubey said Bitcoin has created a lot of curiosity among young people in India. Support for the use of cryptocurrencies extended by IAMAI is also a key factor in ensuring popularity. He further stated that India’s startup sector is particularly fond of cryptocurrencies as it facilitates cross-border transactions, providing many opportunities for SMEs to expand their presence across the global market.
“Cryptocurrencies are considered assets that are not fully serviced by the banking system and include inherent security, low transaction fees, lack of interference from the banking system, easy access and use, and universal awareness. Due to the factors, it is gaining grounds in India, despite the consistent attempts by the government to ban it, “Dubey said.
What is the future of Indian cryptocurrency?
In India, regulators and governments are skeptical of cryptocurrencies and are concerned about the risks involved, Dubey said.
“The future path is as the cryptocurrencies and regulations of the official digital currency bill of 2021 are already in the pipeline for creating a’promotion framework’for creating official digital currencies issued by RBI. It will be confusing as a private cryptocurrency. The aforementioned bill bans all private cryptocurrencies in India, but allows certain exceptions to promote the underlying technology and its use of cryptocurrencies, “Dubey said.
But Shetty sees the future of Indian cryptocurrencies as exciting.
“I’ve seen the Prime Minister talk positively about blockchain. He’s confident that Indian youth will keep up with this global phenomenon. Slowly, more and more. People are aware of crypto and want to pursue a career in blockchain. Positive regulation will greatly boost the adoption of crypto in India by increasing the number of startups building projects on blockchain. With high-tech giants like JP Morgan and Facebook riding the tide of cryptocurrencies, cryptocurrencies will become mainstream within the next few years, and cryptocurrency use cases will become more and more real. The future is exciting! “Shetti said.
Would you like to invest in cryptocurrencies?Risk, safety legal status, future of India-everything you need to know
https://www.financialexpress.com/money/investing-in-cryptocurrency-risks-safety-legal-status-future-in-india-all-you-need-to-know/2195319/ Would you like to invest in cryptocurrencies?Risk, safety legal status, future of India-everything you need to know