The legality of Bitcoin varies greatly among different countries, and in some countries, the legal status of Bitcoin is yet undefined or unstable. While some states give exclusive permission for trading and investment in Bitcoin, other states either impose restrictions or move to put a complete ban on the circulation of Bitcoin. Various governments, agencies, regulatory authorities, and courts classify Bitcoin in different ways. If you are enthusiastic about trading in Bitcoin in India, then read on to find out more about Bitcoin’s legality in India, besides probing into its status in other countries as well.
Bitcoin’s legality in different countries
The US
The US Treasury considers Bitcoin as a decentralized and convertible digital currency since 2013. According to IRS, Bitcoin is as taxable as property. The US made Bitcoin’s legality clearer in the US Supreme Court case of Wisconsin Central Ltd v. The United States, in which every Bitcoin business has to register with US FinCEN and enforce AML.
The UK
In 2017, the UK government declared Bitcoin to be a foreign currency for most of the financial purposes inclusive of GST and VAT, because of its unregulated nature. CryptoUK, the industry authority of the UK, recognized Bitcoin’s legality and is seeking to enhance the industry standard of Bitcoin and its infrastructure to improve security.
China
Bitcoin is legal in China, but there is a ban on the execution of Bitcoin transactions by financial institutions. There has been a crackdown on mining operations as well by the State Administration of Foreign Exchange in China. Due to such measures, trading in Bitcoin in China is only possible on a decentralized peer-to-peer basis.
Japan
Bitcoin is legal in Japan. From 2017, the businesses of the crypto exchanges of Japan are governed by the Payment Services Act. The Act confirms Bitcoin’s legality and makes it mandatory for the crypto exchange to register under the Act, maintain records of transactions, adopt stringent security measures, and protect the users of Bitcoin. Trading in Bitcoin must also comply with the provisions of the anti-money laundering law of Japan.
Singapore
Bitcoin is legal in Singapore. In 2013, the Monetary Authority of Singapore (MAS) decided not to intervene in Bitcoin transactions. MAS also issued warnings about the risks of Bitcoin trading and businesses. In 2014, the Inland Revenue Authority of Singapore imposed taxation guidelines on Bitcoin as a mode of payment for goods and services. In 2019, MAS gave recognition to Bitcoin’s legality as a token of electronic payment.
United Arab Emirates
The UAE authority has imposed an absolute ban on Bitcoin transactions. Nevertheless, in 2018, Regal RA DMCC, the Dubai gold trader, got the license to conduct proprietary trading in Bitcoin. The establishment of ICOs and crypto exchanges is strictly prohibited.
The legal status of Bitcoin in India
As of today, the mining, trading, selling, and buying of Bitcoin is not illegal in India under any law. However, the concept of Bitcoin is still new in Indian economics, and so, the taxation of Bitcoin is not in any statute books of India so far. In 2018, the finance minister declared that although Bitcoin is not recognized as a legal tender, its advanced technology that is the Blockchain technology, can be used to develop payment systems. In early 2018, the RBI imposed a ban on the trading of Bitcoin for entities that are under the regulation of the RBI. However, in March 2020, the Supreme Court passed the verdict of the revocation of the RBI ban on the trading of cryptocurrencies.
Supreme Court verdict on cryptocurrency
In March 2020, the Honorable Supreme Court quashed the RBI ban and passed the verdict of allowing trading in Bitcoin and other cryptocurrencies. The ban was declared to be disproportionate in the case of the Internet and Mobile Association of India v. Reserve Bank of India. In other news, the RBI is reportedly seeking to file a review petition to challenge the verdict of the Supreme Court.
How is India working on the implementation of Bitcoin?
After the court victory, the cryptocurrency exchanges of India are now gearing up to meet the surge of Bitcoin trading. Simply put, India is now working on enabling Indian Bitcoin traders to make deposits of funds in INR in the crypto exchange directly from the bank accounts. The crypto exchanges of India are also working on stronger KYC measures, stricter user data confidentiality policies, and anti-money laundering programs, now that the ban has been lifted.
Conclusion
The crypto enthusiasts of India are celebrating the legal breakthrough of Bitcoin after the “unconstitutional” ban on cryptocurrency by the RBI was lifted by the Supreme Court. All those companies that had shut down their cryptocurrency ventures post the RBI ban will now spring back to a flourishing business. There will be renewed development of cryptocurrency infrastructure as well. If you are a crypto enthusiast too, then now is the best time to make the best of Bitcoin’s legality in India and rake in huge profits.
