LEGAL STATUS OF CRYPTOCURRENCY IN INDIA AND OTHER COUNTRIES

AUTHOR – SOFIA S, STUDENT AT THE TAMIL NADU DR.AMBEDKAR LAW UNIVERSITY

BEST CITATION – SOFIA S, LEGAL STATUS OF CRYPTOCURRENCY IN INDIA AND OTHER COUNTRIES, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (8) OF 2026, PG. 905-915, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/IJLRV6I899

Abstract

Cryptocurrency has emerged as one of the most significant technological and financial innovations of the modern era, fundamentally transforming global financial systems through decentralized blockchain technology. Unlike traditional fiat currencies regulated by central banks, cryptocurrencies operate through peer-to-peer networks without centralized control. While they provide advantages such as transparency, efficiency, global accessibility, and secure transactions, they also raise serious concerns relating to money laundering, cybercrime, tax evasion, financial instability, investor protection, and monetary sovereignty.

This paper examines the legal status of cryptocurrency in India and compares it with regulatory approaches adopted by other countries including the United States, China, Canada, the United Kingdom, Japan, Australia, Singapore, South Korea, Brazil, and the European Union. It analyses the role of the Reserve Bank of India in regulating financial systems and addressing risks posed by private cryptocurrencies. The study highlights the RBI’s cautious approach, including its 2018 circular restricting banking support for cryptocurrency businesses and the landmark decision in Internet and Mobile Association of India v. Reserve Bank of India, where the Supreme Court struck down the circular on grounds of proportionality.

The paper further discusses India’s taxation framework under the Finance Act, 2022, including the 30% tax on crypto gains and 1% TDS provisions, reflecting partial recognition of cryptocurrencies as virtual digital assets without granting them legal tender status. It also examines the RBI’s support for the Central Bank Digital Currency (CBDC), namely the Digital Rupee, as a sovereign alternative to decentralized cryptocurrencies.

Through comparative analysis, the paper identifies major challenges in cryptocurrency regulation such as jurisdictional complexity, cybersecurity risks, market volatility, and regulatory uncertainty. It concludes that India requires a comprehensive and balanced legal framework that promotes innovation while ensuring financial stability, investor protection, anti-money laundering compliance, and effective regulatory coordination among national and international institutions.