38.6c New Delhi, India, Sunday, June 16, 2024
Speak Legal

Legal Challenges of Cryptocurrency

By LawStreet News Network      14 March, 2018 02:12 AM      2 Comments

Are cryptocurrencies recognized as a legal tender in India?

Legal tender means money that can be officially used in a country for payment of debt. In India, coins and paper money that are issued by the Central bank are only recognized as legal tender. Thus, to be accepted as a legal tender cryptocurrencies have to come either under the category of coin or paper money.

As per section 2(a) of the Coinage Act, 2011 "coin means any coin which is made of any metal or any other material stamped by the Government or any other authority empowered by the Government in this behalf and which is a legal tender including commemorative coin and Government of India one rupee note."

Coming to the paper notes, as per section 25 of the Reserve Bank of India Act, 1934 "The design, form, and material of bank notes shall be such as may be approved by the Central Government after consideration of the recommendations made by Central Board."

Consequently, cryptocurrencies not being approved by the Central Government cannot be identified as a legal tender and hence cannot be legally used as a medium of payment.

Legal challenges of cryptocurrency

Cryptocurrencies not being recognized as a legal tender in India is just the tip of an iceberg, there are many other legal challenges surrounding the virtual currency that are:-

  1. Not recognized under the payment and settlement system in India

According to The Payment and Settlement Systems Act, 2007 the Reserve Bank of India is the only designated authority for the regulation and supervision of payment systems in India (section 3) and no person can commence or operate a payment system without the authorization of the central bank (section 4). Therefore, cryptocurrencies not being authorized by RBI cannot be accepted as a valid mode for payment and settlement in India.

  1. Cryptocurrency does not come under the ambit of FEMA

As per section 2(h) of The Foreign Exchange Management Act,1999 currency includes all currency notes, postal notes, postal orders or such other similar instruments as may be notified by the Reserve Bank and as mentioned earlier cryptocurrency not being recognized as currency by the Reserve Bank, FEMA could not be applied to virtual currencies. Accordingly, the Government could not prosecute cryptocurrency holders under the Act.

  1. No regulatory trade mechanism for cryptocurrencies

As cryptocurrency is not recognized as security as per the definition of 'securities' under section 2(h) of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India is not empowered to regulate it.

The above information has been gathered byLawStreet Journal reporter from different sources including seminars and views of cybercrime expert Advocate Neeraj Aarora.



Share this article:

User Avatar
About:


John Doe
alicejenifferze Jul 01, 2020

There might be some legal issues but soon we overcome it.

John Doe
Alice Jun 15, 2020

India may face legal challenges today but soon it all the Indian sectors will adopt Cryptocurrencies

Leave a feedback about this
TRENDING NEWS

india-tv-journalist-rajat-sharma-sues-congress-leaders-for-defamation
Trending Judiciary
India TV journalist Rajat Sharma sues Congress leaders for defamation

Veteran journalist Rajat Sharma sues Congress leaders for defamation in Delhi HC, alleging tweets damaged his 40-year reputation. Justice Krishna reserves order.

15 June, 2024 12:09 PM
miscreants-scribble-ram-on-goat-headed-for-bakri-eid-sacrifice-gau-gyan-foundation-demands-action
Trending Crime, Police And Law
Miscreants scribble "Ram" on goat headed for Bakri Eid sacrifice, 'Gau Gyan Foundation' demands action

Miscreants scribble 'Ram' on goat headed for Bakri Eid sacrifice in Mumbai, animal welfare organization Gau Gyan Foundation demands police action for hurting religious sentiments.

15 June, 2024 05:49 PM

TOP STORIES

madras-hc-directs-tn-puducherry-to-implement-lawyers-welfare-schemes-and-ensure-minimum-pay-for-junior-advocates
Trending Judiciary
Madras HC directs TN, Puducherry to implement Lawyers' Welfare Schemes and ensure minimum pay for junior advocates [Read Order]

Madras HC directs TN and Puducherry to implement lawyers' welfare schemes and ensure minimum stipends for junior advocates, addressing delays and exploitation concerns.

10 June, 2024 12:03 PM
supreme-court-extends-time-for-aap-to-vacate-office-premises-by-aug-10
Trending Judiciary
Supreme Court extends time for AAP to vacate office premises by Aug 10

SC extends AAP's deadline to vacate office till Aug 10, allowing more time for transition despite no alternative space being provided.

10 June, 2024 12:24 PM
delhi-hc-rejects-plea-of-isis-terrorist-who-planned-haridwar-kumbh-mela-terror-attacks
Trending Judiciary
Delhi HC rejects plea of ISIS terrorist who planned Haridwar Kumbh Mela terror attacks [Read Judgment]

Delhi High Court refuses relief for Haridwar Kumbh Mela attack planner ISIS terrorist Mohsin Ibrahim Sayyed.

10 June, 2024 01:31 PM
cant-pass-order-on-the-basis-of-newspaper-reports-sc-castigates-delhi-govt-on-failure-to-remove-defects-in-wp-on-water-issue
Trending Judiciary
'Can't pass order on the basis of newspaper reports,' SC castigates Delhi govt on failure to remove defects in WP on water issue

'Can't pass order on the basis of newspaper reports,' SC castigates Delhi govt on failure to remove defects in WP on water issue

10 June, 2024 01:37 PM

ADVERTISEMENT


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email