Cryptocurrency History in India: From Ban to Boom – A Complete Timeline

The Early Days: Cryptocurrency’s Quiet Entry into India (2009-2012)

India’s cryptocurrency journey began subtly alongside Bitcoin’s global emergence. Between 2009-2012, tech enthusiasts and cryptography groups quietly explored this novel concept. Key developments included:

• India’s first Bitcoin transaction occurred in 2010 when a Hyderabad engineer mined coins on his home computer
• Early adopters used international exchanges like Mt. Gox due to absence of local platforms
• Pioneering communities formed on platforms like Bitcointalk.org to discuss blockchain technology

Regulatory Warnings and Initial Skepticism (2013-2017)

As cryptocurrency gained visibility, Indian authorities responded cautiously. The Reserve Bank of India (RBI) issued its first advisory in 2013, warning users about potential financial risks. This period saw:

• RBI’s December 2013 circular highlighting virtual currencies’ security and legal concerns
• Establishment of domestic exchanges like ZebPay and Unocoin (2014-2016)
• Income Tax Department’s first survey of major exchanges in December 2016
• Government committee formation in April 2017 to study cryptocurrency frameworks

The Boom and the Ban: RBI’s Crackdown (2018-2020)

2018 marked a pivotal year when RBI prohibited banks from servicing crypto businesses. Despite this:

• Cryptocurrency trading volumes surged 500% during 2017-2018 bull run
• RBI’s April 2018 circular banned financial institutions from crypto dealings
• Major exchanges shifted to peer-to-peer (P2P) models to survive
• Finance Minister’s 2018 budget speech declared cryptocurrency isn’t legal tender

The Supreme Court Verdict and Renewed Hope (March 2020)

In a landmark judgment, India’s Supreme Court overturned RBI’s banking ban on March 4, 2020. The court ruled the ban disproportionate, citing:

• Absence of proven harm to regulated entities
• Violation of constitutional freedom to trade
• Lack of RBI jurisdiction over non-fiat currencies

This triggered explosive growth, with Indian crypto exchanges reporting 500% user increase within months.

The Current Landscape: Regulation and Adoption (2021-Present)

Post-2020, India’s crypto ecosystem matured amid regulatory uncertainty:

• 30% crypto tax + 1% TDS implemented in 2022 Union Budget
• India ranked 2nd globally in 2022 Chainalysis crypto adoption index
• Over 15 million active crypto investors as of 2023 (NASSCOM data)
• G20 presidency pushing for global crypto regulatory framework

The Future of Cryptocurrency in India

Potential developments shaping India’s crypto evolution include:

• Possible licensing framework for Virtual Digital Assets (VDAs)
• Central Bank Digital Currency (CBDC) pilot expansion
• Blockchain integration in public infrastructure projects
• Growing institutional investment through regulated channels

Frequently Asked Questions

Q: When did cryptocurrency start in India?
A: Initial exploration began around 2010-2011, with the first Bitcoin transaction occurring in 2010.

Q: Is cryptocurrency legal in India today?
A: Cryptocurrencies aren’t legal tender but trading is legal with tax compliance following the 2020 Supreme Court verdict.

Q: What was the impact of RBI’s 2018 ban?
A: It forced exchanges to adopt P2P models and caused temporary trading declines until the Supreme Court overturned it in 2020.

Q: How are cryptocurrencies taxed in India?
A: Since 2022, 30% tax on profits + 1% TDS on transactions above ₹10,000, with no loss offset provisions.

Q: Which crypto exchanges operate in India?
A: Major platforms include CoinDCX, WazirX, ZebPay, and international exchanges with INR support like Binance.