Since its inception, there have always been polarized views about the nuances of cryptocurrencies. The stoic supporters have at times gone all in and experienced the highs and lows as they came, while the skeptics watched the shenanigans from afar keeping in mind the risks associated with the ecosystem. However, in countries that did not show any outright support for the world of cryptocurrencies, the investors seemed to proceed more with caution and diligence fearing a sudden ban
Crypto journey in India – The question “is crypto banned in India?” seemed to rule the minds of Indian investors for a long time as there was a severe lack of communication from the government. In 2018, when there was an announcement from the RBI regarding the ban of cryptocurrencies from banks and other financial institutions, there was huge confusion regarding the vague guidelines. This did not stop the enthusiastic investors from buying, selling, and trading cryptocurrencies as there were no clear instructions about the personal ownership of cryptos. The government’s stance regarding the same has changed and they have come up with regulations and guidelines that need to be followed regarding the holding and trading of cryptocurrencies. There are no two ways about the fact that cryptocurrencies are the biggest sector of investment at the moment. It was natural that the Indian government would come up with ways to ensure the steady, safe and streamlined trading of this asset
Recent regulations and updates regarding cryptocurrencies – With more than 10,000 cryptocurrencies being traded across the globe, India does consist of a very large chunk of the total crypto investors. Even with the legality of the ecosystem in question, crypto investors did not halt their purchase. The fintech sector has been growing rapidly in recent years and the increasing popularity of bitcoin and other cryptocurrencies has made the financial sector boom over recent years. The faith in virtual currencies has grown steadily and therefore, the increased need to set aside some strict rules and guidelines regarding the trade became vital.
The highest financial body in India, The Reserve Bank of India, has ensured the safety and security regarding the dealing of cryptos. While studying cryptocurrencies and reading a crypto blog, it would be vital to understand and know the rules that Indian investors have to follow regarding investment in cryptos.
- The situation regarding the crypto ban was altered in 2020 when the Supreme Court of India stated the ban. The statement recognized the right to practice the trading of cryptocurrencies in India and people could carry on their trades in different capacities.
- The entire legal and regulatory aspects of cryptos revolve around the taxation process that will be levied against cryptocurrencies in India. Different countries have different ways to approach this and India, too, has come up with this rule pretty recently. The Indian government, as per the finance bill of 2022, stated that there would be a 30% tax on the transfer of these virtual digital assets – like cryptocurrencies and NFTs. This rule will be applicable from April 1st, 2022 onwards. Additionally, a 1% TDS will be imposed on every transaction which will be in operation from the current financial year.
- Naturally, this move was met with severe criticism as the overall tax amount was too high. The advantage to this rule would be that these would apply to gains and profits from crypto investments. No tax would be applied if any money was lost from the investments or if a person chooses to hold on to these currencies.
- The legalities of blockchain technology and the trading of cryptos is still unclear. It is an up-and-coming emerging technological aspect that is growing in each corner of the world. The government of Maharashtra is also taking a closer look at the use of this technology for better efficiency in e-governance.
- Since RBI is set to launch India’s Digital Rupee, there is some more uncertainty going on around the sector of cryptocurrencies. CBDCs are similar to digital currencies, however, they would be issued and backed by the Indian government. Even though this would be based on blockchain technology, it is starkly different from the concept of cryptocurrencies, therefore, users need not feel threatened regarding CBDCs replacing cryptos
Cryptocurrencies have a huge role to play in the financial sector and the Indian market. Even during dips, the trading volume is on the higher side and the aura around cryptos won’t seem to diminish any time soon.
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