By Roshan Aslam
An interest in investing in cryptocurrencies has been prevailing in India for some time. While the Reserve Bank of India (RBI) and many experts have raised questions about the security and legality of these Virtual Digital Assets (VDAs), similar to other authorities across the world, Indians have maintained a keen interest in owning and trading popular cryptocurrencies such as Bitcoin and Ethereum.
As per the latest estimates, between 15-20 million investors own cryptocurrencies in India, conjointly possessing around Rs 40 thousand crore. Buying or selling cryptocurrencies is not illegal in India, however, there is a lack of legal frameworks pertaining towards these digital assets, and as per the Government of India at the G20 Summit in New Delhi in 2023, they have been working towards establishing a global collaboration focused to set up regulatory directives.
Currently, cryptocurrency capital gains are levied with a 30 per cent tax in India, yet these assets cannot be directly used as a method of payment as legal transactions in the country. However, particular scopes exist for using cryptocurrency for online shopping in India currently, but with limited businesses.
Contemporary Status Of Cryptocurrency In India
The greatest challenge faced by cryptocurrencies in India is that as a medium for payment, it is not administered by any nodal authority. Legal frameworks do not exist for these assets, and no principles have been established to resolve disagreements in terms of cryptocurrencies.
The RBI has already clarified its position by saying that trading in these digital assets is done at the risk of the investors themselves. However recent developments dictate that the Government of India is seeking to establish an agreeable legal framework to create a cryptocurrency, which will be issued by the RBI.
The Cryptocurrency and Regulation of Official Digital Currency Bill in 2021 spoke about this in detail, similar to India’s response at the G20 Summit last year.
Usage Of Cryptocurrencies For Online Shopping
While global business giants like Microsoft, AT&T, Shopify and Tesla are known to have accepted cryptocurrencies in the past, not all of them are accepting these digital assets as a payment method presently.
For India, businesses currently do not accept cryptocurrencies as a medium of payment, however, a couple of fintechs specialising in the segment are offering a workaround by allowing users to purchase gift cards and vouchers that can be used to purchase goods from Indian pizzerias, leading e-commerce sites, food delivery services and others.
However, this is not a standard practice among users, who are largely known to not avail of these services. The absence of an established regulation surrounding cryptocurrencies seems to be the leading factor behind these decisions from the Indian consumers, which might be changed given a centralised approach and institutionalisation of crypto by a governing agency like the RBI in the country.
Future Scope
The future of digital assets in India is far from being certain. The Indian government was supposed to bring in cryptocurrency regulations at the Winter Session of the Parliament last year. At the time, the Minister of State Finance, Pankaj Chaudhary, answering at the behest of the Ministry of Finance revealed the need for global collaborations to establish regulations surrounding cryptocurrencies.
The sentiment was reflected in India’s stance at the G20 Summit once again, however, no solid steps have been taken since then that will allow consumers to use digital assets as a direct payment method for online shopping in India.
However, the Indian populace is favourable for the inclusion of digital assets as a payment method in the future and this marks a possible shift towards a more inclusive payment ecosystem in the country in future. For now, this remains a neutral territory, taking the developments into account.
(The author is the Co-Founder and CEO of GoSats)
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.