India’s Discomfort with Blockchain Based Currency : A Vacuum on The Legality of Bitcoins

Cryptocurrency is a digitally created financial asset, used as a medium of exchange without any authority of bank, with no physical structure and legal tender someway giving disrespect to sovereign boundaries and authorities in absence of specific regulatory structure. Bitcoin is the first blockchain-based currency created in 2009 and is highest priced on crypto exchanges worldwide. Bitcoin was introduced in India in 2012 and has been one of the tops searched word on Google last year in India. Since the government's Demonetization announcement, Indian Bitcoin adoption has been on the rise. However, the mushrooming usage of Bitcoins in terrorism funding, ransom wares, illicit drugs trade and cybercrime has raised red flags among the security and law enforcement agencies. The watch guard of Indian Economy and apex authority for Banking, Reserve bank of India (RBI), cautioned the users of cryptocurrencies to its potential risks and threats in 2013. The Ministry of Finance also conducted a public consultation on regulations for virtual currencies in May 2017. In 2018, RBI banned banks from facilitating the activities of cryptocurrency exchange platforms. This move of RBI has stunned the whole industry based on Blockchain financial activities. The decision of RBI is the Supreme Court of India for hearing. The paper discusses the challenges to Bitcoins in India beyond the RBI's ban & way forward. The paper also provides a legal and regulatory perspective of cryptocurrencies particularly Bitcoins in India with a comparison to crypto positive countries