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Despite the lack of regulations, Indians are embracing cryptocurrency. Since 2018, Indian officials are in shambles about cryptocurrency. On May 31, the Reserve Bank of India asked banks to not reject banking services for people who dealt in cryptocurrencies, citing its 2018 order. However, the central bank asked other banks to continue other due diligence procedures on crypto traders under the rules that connect to anti-money laundering and the prevention of terrorism.

In April 2018, the RBI sent out circular instructing banks to ensure customers who deal with cryptocurrencies do not access banking services. This rule came as a result of speculation among RBI officials regarding the legitimacy of virtual currencies issued by private parties, without government interference. The central bank has warned people about the risks that are associated with private currencies and the wrong impact they can have on the financial system. The intent of the 2018 circular was to discourage citizens from trading cryptocurrencies, but that did not happen.

In March 2021, the Supreme Court of India overturned the 2018 RBI circular. The court noted that in the absence of any legislative ban on buying or selling crypto coins, the RBI cannot impose any restrictions on crypto trading. The logic behind this move was the fact that imposing such a ban would interfere with the fundamental right of citizens to carry out any legal trade.

According to the Supreme Court of India, there is no legal, substantial basis to impose strict restrictions on cryptocurrencies, at the moment. But once the law is passed in the parliament, the Supreme Court will not have a say in this matter. Due to this uncertainty, banks are advising the citizens to not trade cryptocurrencies. The Centre is considering a proposal to ban or limit the reach and accessibility of cryptocurrencies and launching their own digital tokens to support the secure, digital payment movement. Called Govcoins, this might imply that the Indian government will only encourage trading of this digital coin, and none other.

Not just India, cryptocurrency skeptics believe that there are high chances that governments around the world will slowly but surely ban all cryptocurrencies as they are decentralized. They argue that governments and the main financial authorities will lose power over monetary functions and dilute the monopolistic power over money.

India still has no definitive stance on cryptocurrencies. Finance Minister Nirmala Sitharaman in March said that there wont be a total ban of cryptocurrencies in the country. But the Centre plans on introducing the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will have the provisions that will define the state of crypto tokens in India.

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To Trade or Not to Trade? The Future of Cryptocurrency in India - Analytics Insight