Is Bitcoin/Cryptocurrency Illegal in India finally? What to do next?

Your Bank will not allow you to Buy Bitcoins/Cryptocurrencies anymore if you are from India.

[First things First: I am not a crypto analyst or an expert in this field. This post, in no way, refers to the future of bitcoins as stable or weak. This is just a fine-print of the current situation and how will it affect Indian buyers]

5th April 2018

So… finally, this is the day India kind of banned cryptocurrencies.

But, hey, our Govt or Supreme Court didn’t pass a rule that Bitcoin is Banned. It’s a passive move from our Govt, to just stop supporting businesses that deals with cryptocurrencies in India.

Just like our Govt tells you: Aadhar Card isn’t mandatory, and then asks your Aadhar Number for LPG Subsidy, Bank Account or any other KYC Verification; the same way, Govt just decided to cut off the loose ends of cryptocurrencies in India, without directly declaring it illegal.

Today, 5th April 2018, our RBI deputy governor BP Kanungo declared that Any of the financial operators of India (such as Banks etc) are required to stop having a business relationship with the entities dealing with virtual currencies. It also gave a time-frame of just three months to conclude any existing business relationships.

In plain words, this means that our Indian banks will be no longer supporting Indian cryptocurrency wallets and exchanges. That essentially means you no longer can use your Bank account to Buy Bitcoins directly, nor you can sell your existing Bitcoins and cash them out to your Bank account.

Say I want to kill you. But, I don’t just stab you with a knife. Instead, I lock you up in a room and close the oxygen supply of that room. Eventually, you will die. Our Govt basically wants to cut off the oxygen supply of the Bitcoins and other cryptocurrencies in India.

They just wants to make sure that no Indians can just go to any website and buy Bitcoins by paying money through their bank account. Same applies for selling Bitcoins and transferring them to your bank account.

Well, this has raised a hue and cry over the crypto enthusiasts in India. A lot of people feared the end of Bitcoins and started selling their coins, leading to a drop of the net value of Bitcoins.

So, in this current situation, What to do now? You might get confused about your next move.

But hey, don’t give up so soon!

There are endless possibilities. Bitcoins are not gonna die so soon.

Here’s the list of things you should note and take care about:

1. Govt. won’t allow you to purchase cryptocurrencies like Bitcoin by directly depositing money into Indian crypto exchanges like Zebpay, Unocoin etc. BUT THE BITCOINS ALREADY IN YOUR ZEBPAY ACCOUNT ARE SAFE. Our Govt. isn’t running away with your bitcoins.

2. In case you are in good profit (I am saying, a few lakhs, anything below that you should not consider a good profit), and decide to end the game here, you might want to sell of your crypto assets. But the irony is, those doing profit in lakhs won’t be moving away from this anytime soon.

3. In case you are not in good profit, or in loss, forget about selling Bitcoins or other cryptos now. Remember, INDIA DOESN’T CONTROL BITCOINS. It might stop you from buying or selling bitcoins, but your existing Bitcoins value will continue to go up or down according to market. Same applies for any other cryptocurrencies like Ethereum, Ripple, Monero etc.

4. A Bonus Tip: Many bitcoin holders will now sell bitcoins due to the current market situation, and you might already notice the bitcoin value coming down. This is in fact a great opportunity to purchase more bitcoins legally when you still have time. Remember, Govt has given 90 days (which might get increased more) time for the banks to terminate business relationship with crypto entities. Till you have the time, watch out for big dips in Bitcoins and invest as much as you are not afraid to lose (yes, don’t forget the key rule: Only invest the amount you are not afraid to lose) for one final time at low price.

5. Our Govt. didn’t ban trading of bitcoins into other cryptocurrencies. So, most likely the Indian trading platforms like Zebpay etc will continue to work as before. You can send or receive Bitcoins as well. But, soon you won’t be able to topup your wallet using Bank Transfer or Internet Banking or your Credit or Debit Cards.
   To be more precise, you see the payment gateways where you authenticate your transaction using pin, password or OTP? That is nothing but your Bank supporting your payment towards the merchant or business partner. Under the new rule, the bank won’t be doing that anymore.

6. Crypto Buy / Sale / Trading isn’t illegal: Just like downloading pirated movies via torrent won’t land you to jail, Govt. is not gonna arrest you if you buy or sale or trade via Bitcoins. Like I said in the very beginning, they are just cutting the loose ends, it won’t affect individuals if they decide to continue playing with cryptos.
   What about tax?
   Bitcoin isn’t a legal tender. Why pay tax for something that isn’t under legal jurisdiction?

7. Shift your existing cryptocurrencies to a wallet whose private keys are owned by you and you alone. This will ensure that you own the cryptos directly and not under any 3rd party. So, even if the 3rd party ceases to exist, you don’t lose your cryptos.
   Actually, this is the recommended way to keep your cryptos in case you are HODLing them. But, most of us casually keep them on trading exchange sites or any online wallet for which we don’t have root access.

Well, so what about Buying and Selling Cryptos from now onwards? You might ask me: How to buy bitcoins or other cryptos after Indian exchanges are stopped?

There are way outs.

There will always be 3rd parties who will accept payment from you using Indian transfer modes like Direct Bank Transfer, PayTM etc and credit Bitcoins to your Wallet.

This is not a centralized merchant transaction, but a individual buyer-seller transaction. This can’t be stopped by our Govt at all.

Imagine you transfer 1 lakh to my Bank Account. And I send Bitcoins worth 1 lakh to your Bitcoin Wallet. How is Bank going to stop that? It can’t.

So, these transactions will continue to boost.

LocalBitCoins is one of such websites having trusted 3rd party Buyers and Sellers. You can check their reviews before transacting so you know they are trusted.

Many times their rates are lower than the Zebpay or Unocoin rates, so many prefer buying via these channels instead.

Eventually, there will be more such websites.

Apart from these, there are many closed and secret communities on Facebook where Person-2-Person deals are also being done. If you are really passionate about cryptos, you will find your way out for buying and selling bitcoins.

Let’s not get panicked.

Just wait and watch as the game continues. ;)

Finally, Digital Asset Exchanges of India has started a petition on Change dot org against RBI to make India the forefront of Blockchain technology. Kindly support it, and maybe we might see bright days of Cryptocurrencies in future. Click Here to visit the petition page.

That’s all folks. Have a good day.

Author: Nirmal Sarkar

He is a tech-blogger from the City of Joy, with magical writing skills. Connect with him on Facebook or Twitter for any kind of technical know-how related to Gadgets, especially Mobiles and Accessories. Proudly owns Hitricks.com.