The government of India stated in early 2018 that cryptocurrencies such as bitcoin are not legal tender in India. While the government has not yet enacted a regulatory framework for cryptocurrencies, the Reserve Bank of India (RBI) has advised caution on their use and has issued three notifications that “cautioned users, holders and traders on the risk of these currencies and clarified that it has not given any licence or authorisation to any entity or company to operate such schemes or deals.”
Most recently, on April 6, 2018, the RBI issued a notification prohibiting banks, lenders and other regulated financial institutions from “dealing with virtual currencies,” which stipulated that “[i]n view of the associated risks, it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.” Moreover, the RBI stated that “[r]egulated entities which already provide such services shall exit the relationship within three months from the date of this circular.” However, Deputy Governor B.P. Kanungo, in a policy press conference, did “recognize that the blockchain technology or the distributed ledger technology that lies beneath the virtual currencies has potential benefits for financial inclusion and enhancing the efficiency of the financial system” and stated that the RBI has “constituted an inter-departmental committee in Reserve Bank of India who will produce a report and they will explore the feasibility and desirability of issuing a digital currency by the central bank.”
Reports in early 2018 indicated that the government is in the process of drafting a law to regulate trade of cryptocurrencies in India and “has formed a committee to fast track the process,” according to the Hindustani Times. The government has expressed two main concerns that the law will address: “the source of money being used to trade in [cryptocurrencies]; and regulation of exchanges of VC [virtual currency] to protect the common man,” one government official was quoted as saying.
An interdisciplinary committee, chaired by the Special Secretary (Economic Affairs), was established in April 2017 “to examine the existing framework with regard to Virtual Currencies.” The committee has nine members including representatives from the Department of Economic Affairs, Department of Financial Services, Department of Revenue (CBDT), Ministry of Home Affairs, Ministry of Electronics and Information Technology, Reserve Bank of India, National Institution for Transforming India (NITI Aayog), and State Bank of India. The role of the committee is to
(i) take stock of the present status of Virtual Currencies both in India and globally; (ii) examine the existing global regulatory and legal structures governing Virtual Currencies; (iii) suggest measures for dealing with such Virtual Currencies including issues relating to consumer protection, money laundering, etc.; and (iv) examine any other matter related to Virtual Currencies which may be relevant.
On August 7, 2017, Business Line reported that the committee had submitted its report, but details of the report had not been made available to the public.
On December 29, 2017, India’s Ministry of Finance released a press statement that cautioned investors about the “real and heightened” risks of trading in cryptocurrencies such as bitcoin, saying virtual currency investments are similar to “Ponzi schemes.” According to a February 1, 2018, news report, the Minister of Finance told lawmakers in Parliament that “[t]he government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,” but “[t]he government will explore use of blockchain technology proactively for ushering in [the] digital economy.”
On November 13, 2017, the Supreme Court of India admitted under article 32 of the Constitution a Public Interest Litigation writ petition against the Union of India and issued a notice to the Ministry of Finance, Minister of Law and Justice, Ministry of Electronics and Information Technology, Securities and Exchange Board of India, and Reserve Bank of India. The petition seeks “a regulatory framework to be laid down on Crypto Currency and wanted that the virtual currency be made accountable to the exchequer.”
The Supreme Court previously heard a petition in July 2017 that sought “a similar kind of regulatory framework”:
A Public Interest Litigation [PIL] was filed (Writ Petition (Civil) no. 406 of 2017) under Article 32 of the Constitution against Union of India, Ministry of Finance and the Reserve Bank of India over the use and business of Bitcoins, Litecoins, Ethereum etc. The Supreme Court on July 14, 2017, directed the RBI and the other concerned ministries to clarify their stance and enact a bill on the same before disposing off the PIL.
 P. Suchetana Ray, Govt Plans to Bring in Law to Regulate Cryptocurrency Trade, Forms Panel, Hindustan Times (Jan. 14, 2018), https://www.hindustantimes.com/india-news/government-plans-to-bring-in-law-to-regulate-cryptocurrency-trade/story-SpAO63DDfk6Gg7lo5yNKCJ.html, archived at https://perma.cc/6HLK-G9LD.
 Seema Jhingan et al., LexCounsel Law Offices, India: Legal Status of Virtual Currencies/Cryptocurrencies in India, Mondaq (Apr. 6, 2017), http://www.mondaq.com/india/x/583670/fin+tech/Legal+Status+Of+Virtual+ CurrenciesCryptocurrencies+In+India, archived at https://perma.cc/5H4T-Y3TT.
 Press Release, Reserve Bank of India, RBI Cautions Users of Virtual Currencies against Risks (Dec. 24, 2013), https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=30247, archived at https://perma.cc/KFB8-JPZ7; Press Release, Reserve Bank of India, RBI Cautions Users of Virtual Currencies (Feb. 1, 2017), https://www.rbi. org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=39435, archived at https://perma.cc/9VTJ-UEL2; Press Release, Reserve Bank of India, Reserve Bank Cautions Regarding Risk of Virtual Currencies including Bitcoins (Dec. 5, 2017), https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=42462, archived at https://perma.cc/B4TK-TL5U.
 Vivina Vishwanathan, Bitcoin Regulations in India, Livemint (Dec. 21 2017), http://www.livemint.com/ Money/uQIHZ7521LBgHClnuP66YM/Bitcoin-regulations-in-India.html, archived at https://perma.cc/527R-43SG.
 Press Release, Reserve Bank of India, Prohibition on Dealing in Virtual Currencies (VCs) (Apr. 6, 2018), https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11243&Mode=0, archived at https://perma.cc/EFW3-HCXG.
 Reserve Bank of India, Edited Transcript of Reserve Bank of India’s First Bi-Monthly Policy Press Conference (Apr. 5, 2018), https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=3465, archived at https://perma.cc/ZD5A-STF7.
 Ray, supra note 594.
 Press Release, Government of India, Ministry of Finance, Government Constitutes an Inter-Disciplinary Committee Chaired by Special Secretary (Economic Affairs) to Examine the Existing Framework with Regard to Virtual Currencies (Apr. 12, 2017), http://pib.nic.in/newsite/PrintRelease.aspx?relid=160923, archived at https://perma.cc/B952-YSLS.
 Panel on Crypto-currency Submits Report to Jaitley, Business Line (Aug. 7, 2017), https://www.thehindu businessline.com/economy/policy/panel-on-cryptocurrency-submits-report-to-jaitley/article9805978.ece, archived athttps://perma.cc/3N3G-352Q.
 Press Release, Government of India, Ministry of Finance, Government Cautions People Against Risks in Investing in Virtual ‘Currencies’; Says VCs are like Ponzi Schemes (Dec. 29, 2017), http://www.pib.nic.in/ PressReleseDetail.aspx?PRID=1514568, archived at https://perma.cc/MN8M-BWQE.
 India Turns Against Bitcoin but Embraces Blockchain, Bloomberg (Feb. 1, 2018), https://www.bloomberg. com/news/articles/2018-02-01/india-to-curb-cryptocurrency-use-while-embracing-blockchain, archived at https://perma.cc/A5QP-YPBB.
 Dwaipayan Bhowmick v. Union of India & Ors., Writ Petition (Civ.) No. 1076/2017 (Nov. 13, 2017), http://supremecourtofindia.nic.in/supremecourt/2017/35252/35252_2017_Order_13-Nov-2017.pdf, archived athttps://perma.cc/52JQ-8RAB.
 SS Rana & Co., India: SC Asks Govt. to Regulate Crypto Currency, Lexology (Nov. 21 2017), https://www.lexology.com/library/detail.aspx?g=4cc566a7-048b-449a-b535-9eb7b3626f78#_ftn1, archived at https://perma.cc/ED6V-EK8B.