Written By Roshan Aslam
The interest in investing in cryptocurrencies has been on the rise in India. Despite concerns from the Reserve Bank of India (RBI) and experts about the security and legality of Virtual Digital Assets (VDAs), Indians remain enthusiastic about owning and trading popular cryptocurrencies such as Bitcoin and Ethereum.
According to estimates, there are currently between 15-20 million cryptocurrency investors in India, holding a combined value of around Rs 40 thousand crore. While buying or selling cryptocurrencies is not illegal in India, there is a lack of legal frameworks governing these digital assets. In response, the Government of India announced at the G20 Summit in 2023 that they are working towards establishing global collaborations to establish regulatory directives.
Currently, cryptocurrency capital gains are subject to a 30% tax in India. However, these assets cannot be used as a method of payment for legal transactions in the country. There are limited opportunities for using cryptocurrencies for online shopping in India, with only a few businesses accepting them.
The Current State of Cryptocurrency in India
The main challenge facing cryptocurrencies in India is the lack of a centralized authority to regulate them as a payment method. There are no legal frameworks in place and no established principles for resolving disputes related to cryptocurrencies. The RBI has stated that investing in these assets is done at the investors’ own risk. However, recent developments suggest that the Government of India is looking to establish a legal framework for a cryptocurrency issued by the RBI.
The Cryptocurrency and Regulation of Official Digital Currency Bill in 2021, along with India’s stance at the G20 Summit, address this issue in detail.
Using Cryptocurrencies for Online Shopping
While major global companies like Microsoft, AT&T, Shopify, and Tesla have accepted cryptocurrencies in the past, not all of them currently accept them as a payment method. In India, businesses do not accept cryptocurrencies as a form of payment, but some fintech companies offer a workaround by allowing users to purchase gift cards and vouchers that can be used for online shopping at select Indian retailers, food delivery services, and other businesses.
However, this is not a widely adopted practice among users due to the lack of established regulations surrounding cryptocurrencies. With a centralized approach and institutionalization of crypto by the RBI, this could potentially change in the future.
The Future of Cryptocurrencies in India
The future of digital assets in India is uncertain. The Indian government was expected to introduce cryptocurrency regulations during the Winter Session of Parliament last year. However, the Minister of State Finance, Pankaj Chaudhary, stated that global collaborations are necessary to establish regulations surrounding cryptocurrencies.
This sentiment was also reflected at the G20 Summit, but no concrete steps have been taken since then to allow consumers to use digital assets as a direct payment method for online shopping in India. However, the Indian population is favorable towards including cryptocurrencies in the future, which could lead to a more inclusive payment ecosystem in the country. For now, the situation remains neutral, with developments still ongoing.
(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.