Cryptocurrency Regulation in India: Challenges and a Way Forward

ABSTRACT
The rapid growth of cryptocurrency is visible across the globe in the past one decade and it is reflected in India too. This digital currency which was originally developed as a payment mechanism has been widely used by people across the globe as a form of investment due to its highly volatile nature. Even though crypto trading is highly popular in India, if we look at the cryptocurrency regulatory framework, it is very evident that the current system is inadequate to govern and regulate a growing technology like cryptocurrency. The current statutory framework is very fragmented and unstructured which leaves consumers in a state of confusion and uncertainty. This paper examines the legal challenges in cryptocurrency regulation in India by exploring the regulatory gaps, jurisdictional issues, issues with consumer protection and taxation, data privacy and intellectual property concerns. The primary research methodology that is used in this paper is the doctrinal approach in order to analyse the Indian legal framework around cryptocurrency. A comparative approach is also employed to study and understand the policy measures employed by other counties. The study reveals the fragmented and inconsistent legal framework around cryptocurrency in India, and lack of effort from the Indian law makers to create a coherent legal framework that understands the intricacies of the technology behind cryptocurrency. The over reliance on the existing legal framework - that is never designed to govern crypto - to govern crypto is also examined through a critical lens. The study also reflects on how this uncertain mechanism leaves the consumers in a state of confusion and helplessness. Finally the paper calls for the adaptation of a coherent, balanced and inclusive regulatory framework that understands the legal and technological complexities of a digital currency like cryptocurrency.