Are you struggling to get the right information about how to buy cryptocurrency in India? That’s why we are here. Yes! You are in the right place.
In recent years we have seen a surge in Cryptocurrency investments in India. More than 10 million crypto investors have emerged from India. We can Buy, Sell, and Trade Cryptocurrencies through exchanges in India.
It’s difficult to find the right information about cryptocurrency in India. In my beginning days, I struggled too to get the right info. This post provides complete information on how to invest in cryptocurrency in India.
So, the first question that comes to your mind is
Is cryptocurrency banned in India? Are cryptocurrencies illegal in India?
No! cryptocurrency is not banned in India. Moreover, they are not illegal in India. At the same time, they are not regulated too. The government is trying to come up with guidelines regarding the functioning of Crypto exchanges in India.
Once the guidelines come into action, cryptocurrencies can become one of the popular asset classes to trade and invest in in a more regulated manner.
History of cryptocurrency in India
In 2018, the Reserve bank of India banned cryptocurrency by issuing a circular. However, the decision failed to stay after the supreme court has ordered permitting banks to handle crypto transactions in March 2020.
Later in 2021, the parliament is expected to pass the most awaited “The Cryptocurrency and regulation of official digital currency Bill” in the monsoon sessions.
Crypto-transaction problems in India
Do you know, why the Government of India is hard towards Cryptocurrencies in India? Let’s discuss one after the other.
The cryptocurrencies must be bought by spending your money (Rupee which is the legal tender in India). But the crypto once bought is stored in your wallet.
You can send the crypto in your wallet to another wallet that is outside India. In simple words, if you think of the wallet as a bank account, the money (Cryptocurrency) in your bank account can be sent to a person’s Bank account which is outside India. But these transactions are not taxed by the Government of India which is against the foreign exchange management act (FEMA).
The enforcement directorate (ED) has raised this issue as a loophole in the foreign exchange management, where money laundering can occur. In other words, the ED is afraid of the illegal transfer of money overseas through crypto-assets.
The problem with crypto transactions is that these transactions are confidential. Even though KYC is done for all the account holders, the complete details of the transactions will not be known.
Let me explain with an example, every account holder will have a wallet address. The wallet address is a code and is difficult to decode.
Let us think that a person Ram wants to send crypto to his friend’s (John’s) wallet. So, he is using Wazirx exchange to send the money.
Now Wazirx knows that Ram is sending the money. But they can’t identify the receiver (unless the receiver also has an account in WazirX), as the receiver’s wallet is only a code with no personal details revealed.
Hence it will be difficult to trace complete transactions of the fraudsters if huge money is exported illegally.
Keeping all these problems in mind, the Government of India is going to bring The Cryptocurrency and regulation of official digital currency Bill 2021.
Our financial minister Nirmala Sitaram has said that the bill is in the final stages of consultation and might not be taken into parliament in December 2021. Hence we can expect a well-regulated bill in 2022.
Once the bill gets implemented, we can expect most of the cryptocurrencies will be regulated in India.
Is cryptocurrency taxable in India?
The taxation laws for cryptocurrencies are still unclear in India. But experts say that crypto profits can be and should be taxed as regular asset classes.
The RBI has not yet considered cryptocurrencies as legal tender in India. Hence its taxation laws are unclear.
Under section 2(13) of the income tax act, any act of business that comprises trade, commerce, or other similar activities should be taxed. Taking it into consideration, the trading transactions would be taxable.
The transactions made in cryptocurrencies would be considered under goods and services and GST could be levied on these transactions.
If you sell the crypto for a profit, then it would be considered as capital gains and will come under taxable capital gains laws.
Crypto mining can be considered a business. As mining is a business where they charge transaction fees (like gas fees in Ethereum) for every crypto transaction, they are prone to come under tax laws. Hence any business with a profit motive will be and should be taxed in India.
Do not skip taxes. People with huge and scalable profits from cryptocurrencies must include their crypto incomes in their tax statements and should pay taxes. Because one or the other day, all the crypto assets will come under tax laws and you will be liable to pay more.
Can we buy cryptocurrency in India?
Yes! You can buy cryptocurrency in India.
Standard Crypto exchanges
The most legal way is to create an account in a popular crypto exchange. There are many crypto exchanges in India like
You can register an account in any one of the above exchanges. Have your KYC done and your account is linked with a HOT WALLET. The wallet will have an address and you can directly buy bitcoins or Altcoins from the exchanges.
Peer to Peer crypto exchanges (P2P)
The second method is to buy from a P2P exchange like LocalBitcoins and Instashif. A P2P exchange is a platform where you can directly find a seller. You must contact the seller and transfer your amount. The P2P exchange will notify and authorize the transaction and will send you the required cryptocurrency once the seller releases them.
But P2P exchanges are much riskier and illegal in a way as they are not regulated by any standard exchange. Money to cryptocurrency mismatches often happen and can lead to loss.
If you are new to cryptocurrency, my advice is to never trade with P2P exchanges until you have some experience. Moreover, I would always suggest going with standard crypto exchanges in India.
Even standard exchanges like WaziriX also provide P2P exchange facilities.
Can we trade cryptocurrency in India?
Good question. Yes, you can trade cryptocurrency in India. But I would suggest No if you are new to the Crypto world.
Huge swings and volatility may eat your position and finally leaves you naked. Yes, you heard it right. The crypto market is news-driven. Most cryptocurrencies you will be trading are not driven by their underlying asset as there is no underlying asset for most cryptocurrencies.
Hence huge fluctuations prevail in the crypto market which is difficult to withstand for a newbie. If you still want to trade, I recommend you to paper trade until you are confident and feel manageable.
As crypto is not regulated to date, in India, it is better to choose cryptocurrency as an investment.
Be aware of new cryptocurrencies!
New cryptocurrencies provide free bugs to you and promote you to trade. Even some exchanges offer discounts and promotional offers for trading these new coins.
But my advice is to be away from these trading stunts. Do not fall into their trap. It is an act to increase their transactions. Remember! You must pay the transaction fee for every trade you do in the exchange.
Hence it is wise to stay away from such promotions till you are confident in cryptos and till you know what you are doing.
Can I invest in cryptocurrency in India?
Yes! The government of India is trying to regular the crypto-currency investments in India. Millions of rupees are flowing into the crypto markets from the corporate giants.
Investing in crypto is much better than trading in crypto. I recommend investing only that money you wish to lose in cryptos.
Cryptos should not be your primary source of investment. It should always be a secondary spot. After your regular investments, still, if you have some money, then I would recommend you invest in cryptos.
When once the government of India recognizes it as an asset class, and identifies it as legal tender, then I would recommend you consider it as another significant investment. Till then hold your breath tight and try not to lure for the amazing and astonishing returns from the cryptos.
The WazirX founder Nischal has commented on the upcoming Cryptocurrency regulations in India. Have a look at it.
There’s a possibility of a new cryptocurrency bill being introduced in Parliament.— Nischal (WazirX) ⚡️ (@NischalShetty) January 29, 2021
It’s aimed at:
1. Helping RBI create its own CBDC
2. Ban private cryptocurrency with some exceptions
Few thoughts below:
Can we sell cryptocurrency in India?
Yes, you can sell cryptocurrencies in India. As we discussed earlier, you can use the Standard exchanges or P2P exchange platforms to sell cryptocurrencies.
Can I mine cryptocurrency in India?
Yes! You can mine cryptocurrency in India. But mining bitcoins or other Altcoins with minimal infrastructure is waste of time.
In recent days the price of these mining rigs has reached the peak top. There is no comparison to the investment and returns. The graphic cards and ASIC (application-specific integrated circuits) are highly-priced due to severe demand among miners.
Moreover, the proof of work demands a lot of electricity and infrastructure to mine crypto coins. Countries like the USA and Australia have developed mining parks and mining farms to compete with the present competition.
Hence, we think mining is not a profitable business for a newbie to enter. Of course, there are many other ways by which you can participate in mining and can earn reasonably good amounts. We are going to discuss them in our next posts.
We should also remember that after the cryptocurrency bill in India, mining could come under GST and might be under income tax surveillance.
How to add money to Cryptocurrency accounts in India?
Adding money to Crypto accounts is a big task in India. Most of the standard crypto-exchanges like WaxirX, Coin DCX, Coin switch kuber, and Buy U coin struggled in the recent days to provide a decent payment gateway for the inflow of funds for their customers.
One main reason could be attributed to that these exchanges are still not under the surveillance of the reserve bank of India. The hard fact is that they have to face such glitches in the future too until they are regulated.
After reading this article, we hope that you got some good information on the present condition of Cryptocurrency in India. We will update the future trends and news on cryptocurrencies regularly.
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