India has always had an on and off relationship with the cryptocurrency industry and its applications. From a complete ban on cryptocurrencies in 2016 to the new budget of 2020 charging a 30% tax on crypto, India has come a long way. Bitcoin, the most popular cryptocurrency in the global market today, is currently standing at 30 lakh reference to its market capitalization. However, the currency comes with a lot of volatility and is highly subjected to market fluctuations. Currently, there are no banning restrictions on the crypto industry in India, though some regulations were made in budget 2022, which we will be discussing sooner. If you are interested in bitcoin trading, visit bitcoin revolution software to acquire an utter guide to crypto trading.
From 2013 to 2017 – The Administrative Journey of Cryptocurrency
The Reserve Bank of India (RBI) 2013 published a warning circular against the use of digital currencies like crypto for the public. The reasons given for the circular included the risks of holding and trading cryptocurrencies, financial risks, customer protection, legal risk, and security-related hazards causing scams, making accounts prone to third parties and hackers.
Moreover, the circulation also mentioned the need to keep a check on the development of the currency, not only bitcoins but other assets such as Ethereum, doge, and Litecoin too. Likewise, by the end of the year, RBI issued yet another warning along with the finance ministry, stating that cryptocurrencies will not be considered a standard and legal form of payment.
During the same year, the supreme court witnessed the filling of two Public Interest Litigations (PLIs), which included one asking for the bank on crypto trading in India while the other included the need for its regulation and application usage in the country. The Indian government established a committee as a response in order to further study crypto trends and the underlying concerns in order to release relevant actions on the transactions and trading. This resulted in no crypto ban, further smoothing crypto transactions and allowing exchanges in the country.
2018-2020
CBDT (Central Board of digital tax) released a draft scheme in march 2018 to the ministry of finance with regard to cryptocurrency banning and its transactions. This resulted in the restriction of crypto exchanges and other financial services to the banks or any other financial institution by the Reserve Bank of India. With relevance to this, the former RBI deputy governor BP Kanungo along with the chairman of CBDT Sushil Chandra, mentioned their views regarding the ban on these digital assets. The chairman of the Central Board of digital tax stated cryptocurrencies as a chain of black money and that people become addicted to illegal trading.
Following this, the central bank of India again issued a circular for commercials and banks, both small and big and cooperative, to limit crypto services and their entities to the public, which included virtual payment system providers too. This had a negative impact on the position of cryptocurrency, where the prices fell, exchanges were stopped, and withdrawals were restricted after its circulation of it.
Finally, the ministry of finance made a committee adopt a draft bill for the working of these digital currencies and mentioned a no ban on cryptocurrency and its services in 2018. While in 2019, the ministry issued a bill demanding a blanket ban on the currency. The on and off relationship made cryptocurrency controversial in India, restricting its growth on the global platform. However, in 2020, a development change took place, and the Supreme country restricted the ban on cryptocurrency made by RBI. This lifted cryptocurrency services for banks and other financial institutions and allowed them to engage in a better form of payment methods and trading for rapid growth and maximum profit revenue generation.
2020-2022 (BUDGET 2022)
The Budget 2022 issued a 30% taxation policy on crypto trading, as stated by the finance minister Nirmala Sitharaman during the Union budget announcement. The taxation will be fixed on all income generated through these virtual currencies. Moreover, the Reserve bank of India is aiming toward the introduction of its digital currency in the coming years. The currency will be in a digital format and will be India’s first central bank digital currency (CBDC project).