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Can we buy cryptocurrency in India legally?
The popularity of cryptocurrencies like Bitcoin, Ethereum and others has skyrocketed in India over the past few years. However, the legal status of crypto has been ambiguous so far, leaving many confused about how to legally buy digital coins and tokens.
This comprehensive guide will walk you through everything you need to know, from the legality of cryptocurrency, the top coins to buy, signing up at Indian exchanges, completing KYC verification, payment methods, safely storing your crypto and more. Let’s get started!
An Introduction to Buy Cryptocurrency in India Legally
Cryptocurrencies are digital or virtual currencies that use cryptography to secure transactions. They operate on decentralized networks, with no central authority like a bank or government.
if you want to buy Cryptocurrency in India Legally then you can consider some of the most popular cryptocurrencies including:
- Bitcoin (BTC) – The first and largest cryptocurrency by market capitalization.
- Ethereum (ETH) – A blockchain platform for decentralized apps and smart contracts.
- Polygon (MATIC) – A scaling solution for reducing Ethereum gas fees.
- Litecoin (LTC) – Faster payments than Bitcoin with lower transaction fees.
- Binance Coin (BNB) – The native currency of the Binance exchange and blockchain.
- Cardano (ADA) – A research-driven blockchain platform with an innovative proof-of-stake consensus.
- Polkadot (DOT) – Connects private and consortium chains to public blockchains.
The craze around crypto has grown rapidly in India, though their legal status is still unclear. While cryptocurrencies are not illegal in India, they lack clear regulations so far. However, buying, selling, trading and holding crypto is not banned and there are exchanges as well as P2P platforms available to purchase coins.
The Supreme Court in March 2020 overturned an RBI circular from 2018 that prohibited banks from supporting crypto transactions. This removed uncertainty and paved the way for renewed crypto trading in India.
According to income tax laws, cryptocurrencies are treated as an asset class similar to real estate, gold etc. This means any profits made from crypto investments are taxable.
While regulatory uncertainty remains, it is completely legal to buy, sell and trade cryptocurrencies. Many leading Indian exchanges allow the purchase of popular coins after completing KYC verification.
Now let’s explore the top cryptocurrencies available for investment in India.
Major Cryptocurrencies to Buy Cryptocurrency in India Legally
Here are some of the most widely traded cryptocurrencies in India that you can look to buy Cryptocurrency in India Legally :
1. Bitcoin (BTC)
The leader when it comes to market capitalization, dominance and popularity. Bitcoin crossed a $1 trillion market cap in 2021. Known for deflationary properties and scarcity.
2. Ethereum (ETH)
Second-largest crypto serving as a blockchain platform for smart contracts and Dapps. Ethereum plans to transition to a proof-of-stake consensus soon.
3. Polygon (MATIC)
A scaling solution linked to Ethereum that reduces gas fees for transactions. MATIC powers a multi-chain ecosystem.
4. Litecoin (LTC)
Forked from Bitcoin, Litecoin allows faster transactions and aims to be a lighter, faster payment method.
5. Binance Coin (BNB)
Utility token used on the Binance exchange and blockchain. Used to pay fees on Binance Chain and Binance Smart Chain.
6. Cardano (ADA)
An open-source proof-of-stake blockchain noted for its research-driven approach. Enables creation of smart contracts and Dapps.
7. Polkadot (DOT)
Facilitates cross-chain transfers and interconnects permission and permissionless blockchains. Based on a heterogeneous multi-chain framework.
This covers most of the major cryptocurrency options available for investment and trading in India currently. The overall crypto market cap globally stands at over $1 trillion.
How to Open an Account at a Crypto Exchange in India
To Buy Cryptocurrency in India Legally, you’ll need to open an account at a cryptocurrency exchange. Some leading India-based exchanges include:
- WazirX – Acquired by Binance, has its own token and mobile app
- CoinDCX – Features crypto investing, trading and staking options
- CoinSwitch Kuber – User-friendly app tailored for Indian investors
You can also use international exchanges like Coinbase, Kraken or Gemini that allow purchases with INR.
Here are the steps to open an account:
- Visit the exchange website or install the mobile app – Create your account either on the web platform or mobile app for convenience.
- Sign up and create a login – Provide your name, email ID, and phone number and set a strong password. Enable two-factor authentication for extra security.
- Verify your identity – You will need to complete know-your-customer (KYC) verification by providing your PAN Card, Aadhaar, and documents as proof of identity and address.
- Link your bank account – Connect your savings account via net banking, credit/debit card, UPI or any other supported payment methods. This allows you to add and withdraw funds.
Once your account is opened, you can proceed to deposit INR and start purchasing cryptocurrencies of your choice. Ensure you compare exchanges in terms of fees, supported coins, security features and user reviews before selecting one.
Completing KYC Verification on Crypto Exchanges
KYC or Know Your Customer verification is mandatory at registered Indian exchanges to comply with anti-money laundering regulations and to buy Cryptocurrency in India Legally. You will need to provide:
- PAN Card – This is linked to your income tax returns and confirms your identity.
- Aadhaar Card – For additional ID proof along with an officially recognized photo identity document.
- Address proof – Documents like passport, driver’s license, electricity bill, etc. with your residential address.
Without submitting KYC documents, you can’t buy Cryptocurrency in India Legally and you will be unable to withdraw or transfer any purchased cryptocurrency from the exchange.
KYC verification may take 1-2 days, after which your limits for transactions get increased. Be sure to use an email address not shared across other sites for safety.
Follow all instructions carefully while submitting your documents. Non-compliance can lead to accounts being suspended by exchanges.
Payment Methods Available to Buy Cryptocurrency in India Legally
Exchanges support various payment methods to add INR funds and buy crypto. Here are some of the common options:
- Net banking & UPI – Link savings account through instant UPI transfers or net banking. This includes banks like SBI, HDFC, ICICI etc.
- Credit & debit cards – Visa and MasterCard branded debit/credit cards can be used to directly purchase crypto. Convenience charges may apply.
- P2P trading – Peer-to-peer systems connect buyers and sellers for transfers via UPI, Paytm, gift cards etc.
- Bank Deposits – Deposit INR directly via bank transfers like IMPS, and NEFT to the exchange’s account.
- Mobile wallets – Some exchanges may support payments via Paytm, Mobikwik and other mobile wallets.
Compare transaction fees charged by your exchange for different payment modes. Credit card purchases tend to have higher convenience fees in the 3-4% range for example.
Once your KYC is complete and your account funded, it’s time to finally buy some cryptocurrencies!
How to Place Your First Crypto Purchase Order in India
Here is the typical process to buy Cryptocurrency in India Legally and place your order on a crypto exchange:
- Go to the Buy Crypto or Trade section of your exchange.
- Choose your preferred crypto – for example BTC, ETH, MATIC, ADA etc.
- Enter the INR amount you wish to spend or the quantity of coins you want to buy.
- Preview buy order details like current market rate, fees and total cost.
- Confirm the order and complete any authentication steps if prompted.
- Digital coins will be credited to your exchange wallet once payment succeeds.
Instead of buying whole units, you can purchase fractional amounts like 0.2 BTC based on the quantity you spend. Many exchanges have apps to easily place orders and track portfolio performance anytime.
Top exchanges like WazirX and CoinDCX also provide options for market/limit orders, recurring buys and higher trading capability.
Now that you’ve purchased crypto, you need to keep it secure. Let’s look at cryptocurrency storage best practices.
Secure Storage of Cryptocurrency in India
The golden rule is to avoid leaving large holdings on an exchange wallet itself for long. You have two main options for secure storage:
Software Wallets
Also called hot wallets, these provide easy access for transfers and spending. Examples include:
- Exchange wallets on platforms like WazirX, CoinDCX, and Coinbase
- Desktop wallets like Exodus, Jaxx Liberty, Electrum and Atomic Wallet for PC use
- Online wallets MetaMask browser extension wallet
- Mobile wallets like Trust Wallet, Token Pocket and Coinbase mobile app for mobile use
Though convenient, software hot wallets carry risks of hacking, malware, and theft. Enable all available security features like 2FA.
Hardware Wallets
Referred to as cold wallets, these devices store crypto offline for security:
- Ledger Nano S/X – Supports 1,800+ coins and robust security
- Trezor – An offline safe popular for storing Bitcoin and Ethereum
- Safepal – Budget hardware wallet for multiple cryptocurrencies
Though paid options, hardware wallets offer robust protection against online threats by keeping keys offline.
Ideally, use software hot wallets only for active crypto needs. Keep the bulk of holdings in cold storage devices like Ledger and Trezor for long-term security.
Selling and Trading Cryptocurrency in India
To book profits or cut losses, you can sell crypto holdings similarly to buying:
- Go to the Sell Crypto or Trade section on your exchange
- Select the coin to sell and the desired amount/value
- Confirm details and complete the order
- INR funds were credited to your linked bank account after the settlement
Remember crypto sales can have capital gains tax implications based on profit. Maintain records of buying price and sale prices for taxation purposes.
Exchanges also allow crypto-to-crypto conversions and trading into stablecoins like USDT to lock in gains. Overall, the process of selling is quite straightforward.
FAQs related to buying Cryptocurrency in India Legally
Q. What are some of the best cryptocurrency exchanges in India to buy Bitcoin and Ethereum?
Some leading Indian crypto exchanges to buy Bitcoin, Ethereum and other coins include WazirX, CoinDCX, CoinSwitch Kuber, ZebPay and Unocoin. These platforms allow purchasing crypto with INR after account verification.
Q. Is it legal to buy cryptocurrency like Dogecoin and Solana in India if I follow KYC norms?
Yes, it is legal to buy, sell and hold cryptocurrencies like Dogecoin, Solana, Cardano, etc. in India as long as you use a registered local exchange and complete KYC verification properly. There is no ban imposed by authorities on crypto transactions.
Q. What documents do Indian exchanges need for KYC to start crypto trading?
Indian platforms need you to submit a PAN Card, Aadhaar Card and proof of address documents like a passport, driver’s license, electricity bill etc. KYC is mandatory to legally comply with anti-money laundering regulations.
Q. Can I use UPI apps like Google Pay and Paytm to fund my crypto investments in India?
Yes, most Indian exchanges allow linking UPI apps like Google Pay, Paytm, PhonePe, BHIM etc. to transfer INR and buy cryptocurrency like Bitcoin, Ethereum, and Dogecoin after KYC.
Q. Is it safe to store large amounts of crypto holdings on Indian exchange wallets?
It is not recommended to store large crypto holdings on exchange wallets. Instead, transfer to more secure options like hardware wallets or software hot wallets for active use. Only keep smaller amounts on exchange wallets.
Q. How can I sell cryptocurrency like Litecoin and Polygon legally in India?
You can sell crypto like Litecoin, Polygon etc. on Indian exchanges just like buying them. Selling is done similarly on the platforms and sales may be liable for capital gains tax as per Indian income tax laws.
Q. Which payment methods can be used for P2P crypto trading in India?
For P2P trading directly with sellers, you can use payment methods like bank transfer, UPI, Paytm, gift cards, etc. This allows purchasing crypto with INR without using an exchange as an intermediary.
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Conclusion – How to buy Cryptocurrency in India Legally
That concludes our in-depth guide on How to buy Cryptocurrency in India Legally following all legal processes and precautions.
Here are the key takeaways:
- Crypto is legal in India but lacks regulatory clarity as of now.
- Leading exchanges like WazirX and CoinDCX enable the purchase of coins after KYC.
- Stick to well-known coins like Bitcoin, Ethereum, Cardano, Polygon and others.
- Fund accounts via UPI, cards, net banking and P2P payments.
- Store holdings safely in software hot wallets and hardware cold wallets.
- Selling crypto may be liable for capital gains tax – maintain records.
- Research thoroughly and invest prudently considering risks and volatility.
While the long-term outlook remains positive, be cautious and avoid putting your life savings into cryptocurrency. As the market matures in India, we can expect greater regulatory clarity and probably an exciting future for crypto adoption.
Disclaimer for how to buy cryptocurrency in India legally :
The content provided in this article summarizing how to buy cryptocurrency in India legally is for informational and educational purposes only. CryptoWini does not provide any financial advice or endorse any crypto exchanges, coins, products or services mentioned. Conduct your own due diligence before selecting any platform or investing.
Cryptocurrencies involve high risk and are volatile digital assets. No guarantees can be provided related to their value going up or down. CryptoWini and the author of this article cannot be held responsible for any trading or investment decisions made by readers.
Crypto investments may also have tax implications based on personal circumstances. You may want to consult a financial advisor or tax professional before buying/selling crypto. Please invest responsibly at your own discretion.
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