Well, the Reserve Bank of India (RBI) imposed a ban on banks from facilitating cryptocurrency transactions in 2018. This circular made the entire crypto community in India go haywire, and they filed writ petitions to challenge the ban.
Two years later, in March 2020, the Supreme Court ruled against the RBI ban. It stated there were no clear reasons for imposing such a ban.
Currently, the scenario is very different in the crypto space. Renowned investors are funding several fintech startups to build the space. More retail investors are now interested in going to market. More than 2 million users registered as investors in crypto start-ups like CoinSwitch Kuber in just six months after its launch.
Recently, the Reserve Bank of India (RBI) announced that it is examining the need to create a central digital currency (CBDC) to regulate the market, which could be a positive step for the crypto market.1
Cryptocurrency transactions are taxed
Cryptocurrencies are decentralized.
They are not controlled or regulated by a central authority or a government. However, this does not mean that you are not required to pay taxes if you are investing in cryptocurrencies.
Any income in India will be brought under the purview of income tax. Like any other investment, the gains made by investing in cryptocurrencies are also subject to capital gains tax under the Income Tax Law.
Depending on your holding duration, they can be classified as short-term or long-term capital gains. Others also classify it as income from other sources in their income.
However, the status of the cryptocurrency, whether it is a currency or a commodity, is still vague. Unless there is precise regulation governing the market, there is no way to determine how these assets will be taxed.
Cryptocurrencies are not expensive
In general, when we say cryptocurrency, people tend to associate it with Bitcoin.
You may know that the price of a single Bitcoin is now a whopping ~ 30 lakhs2 per coin. Many potential investors assume that they cannot invest in such high-value assets and tend to stay on the sidelines.
What most people don't realize is that you can also buy Bitcoins in installments. In India, there are crypto exchanges like CoinSwitch Kuber, which allow their users to buy Bitcoin with a minimum investment of just â‚¹100.
Apart from Bitcoins, many other cryptocurrencies in the market also have the excellent potential of earning high returns.
The value of crypto is as real as Rupee
Cryptocurrencies are digital assets and do not have a physical form like paper money.
The intangible nature of crypto has led many to believe that cryptocurrencies have no real value and are just a set of codes.
The truth is that no currency has real value unless people believe in it.
For example, in India, the rupee is important because it is a sovereign currency and people believe in its sovereignty.
Suppose the government declares the rupee invalid overnight and introduces a new currency; Then the rupee will be worthless.
Likewise, many people have placed their trust in cryptocurrencies as a medium of exchange and store of value.
Although it is a decentralized system, it is being held together by a community.
Investing in cryptocurrency is simple
Investing in cryptocurrencies comes across as something suited for technologically knowledgeable people and that others may not succeed in it.
Two years ago, investing in cryptocurrencies was extremely complex, and that scenario changed after the Supreme Court ruled out the RBI ban on cryptos.
Cryptocurrencies are nothing more than the money that exists only virtually.
It is a decentralized digital currency that uses digital files as a method of exchange instead of paper cash.
You can use cryptocurrency to buy goods or services, although most people around the world use it as a store of value. That is, it is used as an investment tool like stocks, bonds, etc.
The first and most popular cryptocurrency is Bitcoin. There are currently more than 8,000 cryptocurrencies in circulation. Recently, cryptocurrency, as an asset class, crossed the mark of $1 trillion in market capitalization.
More startups such as CoinSwitch Kuber have emerged in the crypto space to make buying/selling digital currencies easier for investors. If you want to invest in cryptocurrencies, all you have to do is choose the correct platform of your choice, complete KYC in less than ten minutes, and once your profile is approved, you can start investing in crypto immediately.
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