Is Bitcoin trading considered money laundering in India? Indian minister says Bitcoin is illegal

In a written response to a question in the Rajya Sabha, the upper house of the Indian parliament, an Indian minister recently said that the use of Bitcoin in India is not authorized by the Reserve Bank of India (RBI), which may put users in violation of anti-money laundering provisions in Indian law.

Indian Minister Claims Bitcoin Is Illegal

According to The Hindu, Arjun Ram Meghwal, Union Minister of Finance and Corporate Affairs, recently gave a written reply to a question raised by Parliament:

“The lack of a counterparty in the use of virtual currencies, including Bitcoin, and the use of these anonymous/pseudonymous systems for illegal and illicit activities may result in users inadvertently violating anti-money laundering and counter-terrorism financing laws.

Not recognized by monetary authorities

One of the reasons the Indian government claims Bitcoin is illegal is that it has not been approved or endorsed by a central bank or monetary authority.

The Minister also stated in his reply to Parliament:

“Entities engaging in cryptocurrency activities should have regulatory approval, registration or authorization, but they are not.”

Has the Indian government already messed up its bad demonetization policy?

We should remember that in November 2016, the Indian government implemented a very bad policy of demonetization, eliminating 86% of the cash in circulation in India. The aftermath of this demonetization campaign was simply disastrous, and Indians had to wait for weeks outside ATMs to exchange for new currency.

Following the demonetization of banknotes, Indians’ interest in Bitcoin has increased significantly. According to India Today, the number of Bitcoin users in India has increased by 250% since November 2016.

This has led the Indian media to suspect that Bitcoin is being used for money laundering, and some people believe that cryptocurrencies pose some kind of threat to India.