The Indian crypto community rejoiced when the Supreme Court made a move to understand and regulate crypto. However, the quickness of the hearing’s adjournment shocked the community. A month since the hearing, there are rumors that the government is planning a complete ban on cryptocurrencies under the Prevention of Money Laundering Act, which has left many crypto holders in the country nervous.
Crypto Kanoon, an Indian blockchain and crypto-news platform, interviewed Vijay Dalmia, an advocate at Vaish Associates and an expert in understanding money laundering. He explained the nitty-gritties of money laundering and clarified various doubts surrounding crypto and its rumored ban.
Dalmia clarified that dealing in crypto is not an illegal act, if the purchase is made with disposable income i.e. after proper taxation. When asked about whether owning crypto in a foreign exchange for crypto-to-crypto trading was legal, the advocate said that only the use of crypto for trade in India would be deemed illegal. However, owning it on a ledger or a wallet or an exchange outside India, would not be deemed illegal. The advocate took the example of Bitcoin to explain further,
“If you use Bitcoin to buy an asset outside India then on your return, FEMA [Foreign Exchange Management Act] will get triggered.”
“The authorities will check into whether the individual’s purchase is within the guidelines of the RBI, if not FEMA will be attracted.”
Dalmia also noted that dealing in crypto or a crypto-to-crypto trade on an exchange outside India is not illegal. However, the conversion of crypto to fiat and the subsequent use of the fiat currency [Rupee] for buying any other asset will be an illegal act.
Dalmia also spoke about the RBI’s guidelines for crypto-expenses on international trips and the corresponding punishment under the money laundering act.
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