February 15, 2023
143
0Is Crypto Mining Legal in India?
India may become the first country in the world to prohibit the possession, production, and sale of cryptocurrencies. As a punishment for non-compliance with the law, it is proposed to impose not only a fine but also a prison sentence.
In the article, we will tell you is crypto mining legal in India and all the nuances of cryptocurrency regulation in the country.
How to buy bitcoin in India? You can find several working ways here.
Cryptocurrency in India
Recently, Indians have purchased cryptocurrencies for $6.6 billion, and for the entire previous year — for $40 billion. The total trading volume on the three largest exchanges increased from $10 million to $217 million, according to CoinGecko.
Such a surge in activity was caused by the cancellation by the Supreme Court of India of a circular prohibiting any transactions with cryptocurrencies (up to 10 years in prison were provided for violation.) From March 4, 2020, banks and any other financial institutions can no longer dissuade customers from purchasing digital coins.
Is crypto mining legal in India?
According to the new law, the issue of the Central Bank of India’s own digital currency (as in China) is being considered, followed by a ban on the personal use of bitcoin and altcoins. Investors will be allocated six months to get rid of all crypto assets. Then they will start issuing fines, and after that, they will apply tougher measures.
Learn more about how to buy bitcoin in China here.
The loophole may remain only for coins that promote new revolutionary blockchain technologies. Nirmala Sitharaman (Finance Minister) said that the government will try to take into account the opinions of all market participants. The Central Bank has not yet made a final decision on the necessary level of regulation of unofficial electronic currencies.
“Most likely, there will be no strict restriction. India cannot afford to turn a blind eye to new technologies used all over the world,” Sitharaman concluded.
Before the official adoption of the new law, all types of cryptocurrencies are in free circulation. There are no state regulatory mechanisms.
Using Bitcoins in India
Many organizations, ranging from hairdressers to gourmet restaurants, now use bitcoin as a payment method. At the moment, there are 19811 points in the world where cryptocurrency is accepted as a payment method or where a cryptocurrency ATM is provided for payment.
Currently, things look a little different in India. Despite the fact that India is among the top countries in terms of interest in bitcoin, there are only a few organizations in this country that accept bitcoins as a payment method, and even fewer cryptocurrency ATMs. However, a recent report, India’s share in the global Bitcoin industry (as well as the industry of other cryptocurrencies) will increase dramatically between 2020 and 2022.
- Bitcoin as a means of money transfers
India is one of the largest money transfer markets in the world. In 2019, India received $554 billion through money transfers. Many Indians working abroad transfer huge amounts of money home every month for their families and relatives. In addition, Indians who work as freelancers with international clients receive payment for their services by money transfers.
The most common problem that occurs when making money transfers is the high cost of the transfer, which can reach up to 5.8% of the transaction amount. Using bitcoin as a means of international transfers, Indians can significantly save on the cost of the transaction.
- Protection against demonetization
After the RBI ban was lifted, there was a sudden surge in demand for bitcoins. Many believe that this surge may be a consequence of demonetization in 2016, when the Indian government withdrew a huge percentage of paper bills. This led to a lot of chaos, as many Indians found themselves with a lot of paper bills that suddenly devalued.
This event paved the way for a significant increase in bitcoin trading volumes and price growth on Indian exchanges. This is a clear indicator that Indians have realized that bitcoin is a safer option than paper bills. After Indians experienced for themselves how unreliable a fiat currency can be, bitcoin, a global asset with high liquidity, became their natural choice.
- Using Bitcoin as a medium of exchange
Demand for dollars is growing among Indian banks and importers, which strengthens the US dollar and reduces the value of the Indian Rupee. Especially during the pandemic, the exchange rate rose significantly because the Indian Rupee continued to depreciate. For Indians involved in world trade, such a depreciation leads to large business losses. In addition, converting rupees into US dollars is a difficult task.
Many Indians now use bitcoin as a “bridge” between Indian rupees and US dollars. The conversion rate can be more profitable compared to Forex markets, and the whole process is usually faster and easier. Many Indians use P2P trading platforms to convert rupees into bitcoins, and then change bitcoins into US dollars.
What is the best platform to change cryptocurrencies? Try to use Crypton Exchange — no-KYC decentralized platform with various options.
What about the national digital coin?
The Indian government has said it will not rush its Central Bank Digital Currency (CBDC) pilot project. A test product recently launched in the country attracted 50 thousand users and 5 thousand sellers. It was initiated by the Reserve Bank of India (RBI), which introduced the concept of the digital rupee to the public back in 2022.
The deputy manager of the RBI, Rabi Sankar, stressed: “The government of the country decided to conduct the CBDC testing phase without forcing the circumstances. This means that the process will be smooth and unhurried. We have goals in terms of users and sellers. We will go slowly.”
He explained that the RBI does not want to promote BSC developments without having a full understanding of their potential impact on the economy.
The specialist added that the Central Bank has no task to hurry up and integrate CBDC into the country’s financial system faster. The latest announcement is supplemented with data from the official application for the digital rupee. It followed from it that the recruitment of new users was suspended as part of the pilot project.
Sankar noted: since the launch of the CBDC trial version on December 1, 2022, 770,000 transactions have been registered in 8 different banks of the country as part of the pilot project. The startup worked in 5 cities, and soon 9 more locations will gradually join the testing. The official also said that the number of banking institutions in the system will grow to 10.
RBI officially introduced the wholesale CBDC in November 2022. A month later, a retail cryptocurrency project was launched. The Indian government has announced that the digital rupee will be a “big boost” to India’s economy. Then the representatives of the RBI proposed a three-step approach to the deployment of cryptocurrencies, aimed at not harming the traditional financial system.
