Untangling the debate : Analysing the legal status of Bitcoins in India

Abstract

Bitcoin system of arrangement is a peer-to-peer transaction without any third party intermediary. Bitcoin involves block chain technology as modus operandi. It could act as significant reserve for India however, absence of regulatory framework dwindles the potential of bitcoins to inflate India’s economy. The precipitous escalation of virtual currencies over the years coupled with the menacing risks, masqueraded a difficult question to be answered for the Indian Government. Navigating the rapid-evolving waves of virtual currencies would be arduous for the government but, failing to do so is simply undesirable. However, absence of any specific legislation for bitcoins could not be construed to make them illegal.

It could be governed by various laws including FEMA regulations, being a foreign currency and SOGA on being treated as goods. Bitcoin system of arrangement facilitates instantaneous transaction at a lower cost coupled with other benefits. Mere probability of misuse of technology shall not act as a catalyser for denial of technology itself. Balanced approach should be devised for facilitating the fruits of technology to mass on the one hand and safeguarding them from potential threat, on the other. The article also analyses the status of bitcoins in foreign jurisdictions . Moreover, in an era of digital transactions, the use of digital or virtual currencies is inevitable, therefore the  countries have to work together to establish the necessary institutional framework to embrace and promote such kind of developments, instead of imposing impediments that stultify their progress.