Cryptocurrencies In India: A Battle With Government Diktats, RBI Warnings

As less than a month is left before the RBI's (Reserve Bank of India) three-month deadline given to banks for snapping their ties with cryptocurrency firms expires, the cryptocurrency traders and exchanges are in utter trepidation and disbelief. Some, however, are somewhat hopeful that after a RBI clampdown comes into force, the legal status (or the lack of it) will be somewhat clear. Lately, the cryptocurrency traders and investors have battled quite a few warnings and diktats issued by ministry of finance, Reserve Bank of India and Union Finance Minister Arun Jaitley.

In early February this year, income tax department even issued a few lakh notices to those who put their investments in bitcoins. The taxman had realised that bitcoin merchants and traders didn't pay advance tax on the benefits which they have accrued.

In the past, the Indian government and the Reserve Bank of India have issued several warnings against dealing in cryptocurrencies including Bitcoins, the former even comparing it with a Ponzi scheme. RBI recently warned users of virtual currencies including Bitcoins regarding the potential economic and financial risk associated with cryptocurrencies.
RBI has also in the past clarified that it has not given any license to any company to operate or deal with Bitcoin or any other virtual currency. Nearly a dozen countries including China have already prohibited the digital currency.
The RBI on Thursday however said that it recognises the importance of Blockchain technology and distributed ledger technology and will encourage it for the growth of financial inclusion.