Cryptocurrency in India 2023

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Cryptocurrency in India: The Twists and Turns of a Turbulent Journey – A Comprehensive History and Event Analysis

  • Early Adoption and Regulatory Concerns:
    • Cryptocurrency, particularly Bitcoin, gained popularity in India around 2017-2018.
    • The decentralized and unregulated nature of cryptocurrencies raised concerns among the Indian government and regulatory bodies about risks such as money laundering and terrorism financing.
  • RBI Circular and Legal Challenges:
    • In April 2018, the Reserve Bank of India (RBI) issued a circular prohibiting banks from dealing with cryptocurrency businesses.
    • The circular faced legal challenges and was eventually deemed unconstitutional by the Supreme Court in March 2020.
  • Drafting of Crypto Regulation Bill:
    • After the Supreme Court ruling, the Indian government began drafting a cryptocurrency regulation bill.
    • The draft bill proposed a complete ban on cryptocurrencies and the creation of a digital rupee as a central bank digital currency.
  • Industry Opposition and Debate:
    • The draft bill received opposition from the cryptocurrency industry and blockchain enthusiasts.
    • Critics argued that a blanket ban would stifle innovation and job creation, pushing cryptocurrency-related activities underground.
  • Mixed Regulatory Signals:
    • While the draft bill proposed a ban, some government officials expressed openness to exploring blockchain technology and regulated use of cryptocurrencies.
  • RBI Cautionary Statement:
    • In May 2021, the RBI issued a statement reiterating its concerns about cryptocurrencies and warned banks against dealing with cryptocurrency businesses.
  • Proposed Crypto Ban and Bill:
    • Reports emerged in early 2021 suggesting a new bill proposing a complete ban on cryptocurrencies and severe penalties for violations.
    • The bill, titled “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021,” aimed to ban private cryptocurrencies and introduce a digital rupee.
  • Union Budget 2022 Statement
    • In 2022, Union Budget 2022 introduced crypto tax regulations, the most important of them being a flat 30% tax on crypto and 1% TDS on sell transactions.