During a Supreme Court case the Reserve Bank of India (RBI), which is India’s Central Bank, conceded that Bitcoin (BTC) and other crypto assets are not illegal, and therefore citizens can hold, invest, and trade crypto.
Specifically, the RBI says that virtual currencies are not prohibited, rather banks and other financial services have been directed to not facilitate crypto activity, and a list of entities associated with cryptocurrency services have been banned.
Essentially, the RBI has done everything they could to inhibit crypto businesses, including forcing all centralized crypto exchanges out of the country and sanctioning certain individuals known to be active in the crypto space, but it seems their jurisdiction falls short of actually making cryptocurrency illegal.
This case certainly clears the air in India, at least for now, since previously it was uncertain if crypto was illegal due to the government coming down so hard on the crypto sector. That being said, decentralized exchange services, peer to peer deals, and LocalBitcoins have been thriving in India, and this new declaration makes it clear that this crypto activity is legal.
Although the situation in India appears to have gotten slightly better for crypto, the government will likely continue to crack down on crypto operations, under the pretense of stopping money laundering. Also, it remains possible that crypto will affirmatively be declared illegal in India at some point in the future.
The silver lining is that this odd regulatory stance, where there are no exchanges allowed but crypto is legal, has turned India into one of the only remaining countries in the world where the crypto space is like a wild west, with any individual having the potential to start a lucrative crypto dealing business.