LEGAL RISKS OF CRYPTOCURRENCY IN INDIA

AUTHOR – ASHIKA KALRA* & DR. NISHA SAIN**, LL.M. (MASTER OF LAWS) SCHOLAR* & ASSISTANT PROFESSOR** AT UNIVERSITY INSTITUTE OF LEGAL STUDIES, CHANDIGARH UNIVERSITY, MOHALI (PUNJAB).

BEST CITATION – ASHIKA KALRA* & DR. NISHA SAIN, LEGAL RISKS OF CRYPTOCURRENCY IN INDIA, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 4 (4) OF 2024, PG. 255-261, APIS – 3920 – 0001 & ISSN – 2583-2344.

Abstract

In India, the legality of cryptocurrencies has been a controversial subject with conflicting opinions and changing laws. In 2018, the Reserve Bank of India (RBI) banned cryptocurrency transactions from banks; however, the Supreme Court reversed this decision in 2020. With continuous debates concerning the possibility of outlawing private cryptocurrencies while investigating a Central Bank Digital Currency (CBDC), the regulatory landscape is still unclear in spite of this. Managing hazards including fraud, money laundering, and financial stability, as well as the requirement for consumer protection and efficient taxation, are the main obstacles. As authorities struggle to develop a framework that fosters technology advancement while protecting economic interests and investor protection, India must continue to strike a balance between innovation and regulation. This essay examines these legal nuances, their effects on the cryptocurrency sector, and possible avenues for an equitable regulatory framework in India. India’s changing regulatory approach to cryptocurrencies is indicative of a larger worldwide effort to strike a balance between the hazards and rewards of digital currencies. Cryptocurrencies raise issues about market volatility, possible abuse for illegal purposes, and difficulties ensuring regulatory compliance, even while they also offer potential advantages including greater financial inclusion, quicker transactions, and technological innovation. The difficulty of developing regulations that safeguard investors without impeding innovation is shown by the Indian government’s hesitancy to accept or reject cryptocurrencies in their entirety. The course that India chooses as it considers a regulatory framework might have a big impact on the country’s startup scene, digital economy, and fintech industry as a whole.

Keywords – Cryptocurrency Regulation, Reserve Bank of India, Blockchain Technology, Bitcoin, Digital Currency in India, Legality, Cryptocurrency Security Risks, Transaction, Fraud, Banks, Ethereum, Services, Digital Currencies, Financial.