The legal position of bitcoins is in â€˜Grey Zoneâ€™ right now. Though under any existing law, Bitcoin is declared as illegal technically which means people can freely trade in bitcoins. However, time and again the Reserve bank of India has issued notifications warning about dealing in various virtual currencies cautiously and at their individual risk as no regulatory approval or registration or authorization had been given to them.
One notable inference is that till today, though multiple notifications have been issued by RBI, government has never illegalized trading in bitcoins in India. And due to immense popularity and ever-increasing value of this virtual currency, many people in India trade in this digital currency. Bitcoins are legal in most of the developed economies like in USA, Japan, European union, Singapore etc.
Legality of Cryptocurrency in India:
When we look at the traditional definition: â€œcurrencyâ€ includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travellers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank.
Though in IndiaÂ RBI or any other banking institution have not declared that Bitcoin is a â€œCurrencyâ€ â€œBitcoinâ€ is an electronic document recognized under Section 4 of Information Technology Act 2000 (ITA 2000) and is admissible as an evidence like a paper document in any Court in India. A digitally signed transfer of this electronic document is also legally recognized.
Hence there is no way (except by retrospective amendment of ITA 2000) that â€œBitcoinâ€ can be considered as an â€œIllegal Assetâ€ or trading in Bitcoins is not a permitted business activity. possession of Bitcoins and trading is perfectly legitimate as any dealing with any asset recognized in law. RBI recently went ahead to warn against using cryptocurrencies and the risk involved in them. While the regulatorâ€™s official stance is one to urge caution among users and adopters, RBIâ€™s Ex-governor and chief Raghuram Rajan has previously stated â€œBitcoin is fascinatingâ€, in late 2014.
Indiaâ€™s leading Bitcoin exchange portal on its official website has even posted a white paper on legality of bitcoins in the country stating that trading in bitcoins is legitimate in India.
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