Bitcoin has the potential to become a global standard for currency, connecting countries and continents in a decentralized financial network. However, for individuals residing in India, the practicality of utilizing Bitcoin is not as straightforward due to the influence of government regulations and central banks.
While Bitcoin pioneers the era of decentralized money, Indian exchanges have faced regulatory inconsistency and confusion, impeding the progress of cryptocurrency adoption in the country. Despite these challenges, India currently ranks 2nd globally in terms of cryptocurrency adoption out of 154 countries, indicating a strong demand for alternative monetary solutions.
For Indian residents looking to purchase Bitcoin using debit/credit cards, bank accounts, or other means, this guide aims to provide you with information on the current Bitcoin landscape in India and offer instructions on how to acquire coins safely and legally.
A Complex History
As Bitcoin gains traction worldwide, India naturally becomes a part of the digital money revolution. With at least nine notable cryptocurrency exchanges and numerous companies exploring cryptocurrencies and blockchain development, India has actively participated in the cryptocurrency ecosystem.
However, the journey has been marked by regulatory shifts. In 2013, the Reserve Bank of India (RBI) expressed skepticism and warned about the risks associated with cryptocurrencies. The RBI even conducted raids on crypto exchanges in December of that year. Surprisingly, by January 2014, the government released a statement stating that they had no plans to regulate cryptocurrencies.
In August 2015, Indian central bankers began discussing the potential regulation of Bitcoin and other cryptocurrencies, citing concerns about their potential involvement in criminal activities.
By November 2016, Bitcoin witnessed increased global and Indian investment, with the government’s controversial withdrawal of 500 and 1000 Rupee notes sparking interest in alternative forms of money.
In February 2018, Finance Minister Jaitley declared that India does not recognize cryptocurrencies as legal tender and opposes their use for payments or criminal activities. Subsequently, the RBI issued a ban on crypto trading through banks under its supervision. On July 3, 2018, the Supreme Court of India upheld the RBI’s cryptocurrency banking ban.
The ban prohibited financial institutions governed by the RBI from providing services to companies dealing with cryptocurrencies, effectively preventing fiat-to-crypto transactions on Indian exchanges. This setback had a significant impact on India’s crypto industry, leading to the closure of many local exchanges or their relocation overseas.
However, in 2019, a petition challenging the ban reached the Supreme Court of India. In March 2020, the Supreme Court overturned the RBI’s ban, reinstating the full legality of cryptocurrency trading within India. The legal team behind the challenge received praise from India’s crypto community.
Unfortunately, the story doesn’t end there. In January 2021, the Parliament of India announced its consideration of a ban on all private cryptocurrencies, excluding those issued by the RBI. During the same month, the RBI announced its exploration of a Central Bank Digital Currency (CBDC), indicating a clash of interests between the RBI, public sector entities, private businesses, and Indian crypto users regarding the use of Bitcoin in India.
Despite this turbulent history, interest in Bitcoin continues to rise steadily in India. However, access to cryptocurrencies may be greatly restricted depending on how the ongoing regulatory discussions unfold.
A Promising Outlook
Even if a second ban becomes a reality, exchanges and cryptocurrency companies are likely to find ways to continue their operations, potentially by shifting away from fiat transactions. Valuable lessons were learned during the previous ban.
For instance, crypto-to-crypto transactions gained prominence in Indian crypto trading, and some exchanges began facilitating peer-to-peer (P2P) trades. In such cases, the exchange acts as an escrow service between two traders. Interestingly, Chinese exchanges followed a similar path after facing a ban from the People
