Crypto as legal tender in India
In an interview with Press Trust of India (PTI), Finance Secretary TV Somanathan stated that, just as gold and diamonds are not legal cash despite their value, private cryptocurrencies would be walking in the same path. He further stated that “cryptocurrencies will never be accepted as legal currency. It is a legal tender, which means it can be used to settle debts. In India, only the Reserve Bank’s ‘Digital Rupee’ would be considered as legal money”. Except for El Salvador, which proclaimed Bitcoin legal cash in September of last year (2021), no other country has made crypto a legal tender. India is drafting laws to govern cryptocurrencies, but no draft has been made available to the public. Meanwhile, the Digital Rupee, a central bank-backed digital currency, will begin to circulate in the coming fiscal year (2022-2023), ushering in more affordable and effective currency management.
Indian laws governing Bitcoins
Currently, India does not own any specialized legislation for governing cryptocurrencies or virtual currencies. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is a proposed bill by the government towards cryptocurrencies, although the government’s stance on the same remains unclear. The same is also not available to the general public. If passed, the bill will be the first step towards the regulation of blockchain technology in the developing land of India. Section 2(47 A) of the Finance Bill, 2022 provides the definition of ‘virtual digital asset’ as any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise. The definition is exhaustive enough to include inherent powers of the Central Government to exclude any digital asset from the definition of the virtual digital asset provided the conditions specified in the provision are abided by. A timeline of events that have taken place with respect to the regulation of cryptos in India has been provided hereunder.