Cryptocurrency

The rise of cryptocurrency has transformed the way individuals and businesses perceive money, investment, and digital transactions. From Bitcoin to Ethereum, digital currencies offer decentralized, borderless, and fast transactions, disrupting traditional financial systems. But with innovation comes uncertainty—especially when it comes to legal regulations, compliance, taxation, fraud, and dispute resolution.

At CyberLex Advocate, we offer expert legal services for individuals, startups, and businesses engaged in cryptocurrency transactions, trading, investments, blockchain projects, and dispute resolution. As India’s legal and regulatory stance on crypto continues to evolve, our role is to help clients stay compliant, secure, and legally protected in this dynamic space.

What is Cryptocurrency?

Cryptocurrency is a form of digital or virtual currency secured by cryptography and built on blockchain technology. Unlike fiat currency, it is decentralized and operates independently of a central bank.

Popular cryptocurrencies include:

• Bitcoin (BTC)

• Ethereum (ETH)

• Ripple (XRP)

• Solana (SOL)

• Tether (USDT)

These currencies can be used for trading, investing, payments, and as the basis for decentralized applications (DApps) and smart contracts.

Legal Status of Cryptocurrency in India (As of 2025)

India does not currently recognize cryptocurrency as legal tender, but trading and holding crypto is not illegal. The regulatory approach is cautious, with focus on anti-money laundering (AML), taxation, investor protection, and preventing misuse.

Key legal developments include:

🔹 Crypto Not Banned, But Regulated

The Supreme Court in Internet and Mobile Association of India v. RBI (2020) quashed the RBI circular that banned banking services to crypto exchanges, thereby allowing crypto trading to continue in India.

🔹 Taxation of Crypto Assets

• As per Finance Act, 2022, income from virtual digital assets (VDAs) is taxed at a flat 30%, with no deductions allowed (except cost of acquisition).

• A 1% TDS (Tax Deducted at Source) applies on every crypto transaction exceeding ₹10,000 under Section 194S of the Income Tax Act.

🔹 Anti-Money Laundering (AML) Rules

As of March 2023, the Indian government has brought cryptocurrency exchanges, wallet providers, and other intermediaries under the Prevention of Money Laundering Act (PMLA). They are now required to:

• Maintain KYC of users

• Report suspicious transactions

• Share information with law enforcement agencies

Risks and Legal Challenges in Crypto

While cryptocurrencies offer new opportunities, they also bring unique legal risks:

✅ Crypto Fraud and Scams

Phishing attacks, Ponzi schemes, fake tokens, rug pulls, and fraudulent investment platforms have become increasingly common.

✅ Hacking and Theft

Exchanges and wallets are targets of cyberattacks, leading to massive losses with limited recourse.

✅ Disputes in Smart Contracts

Errors in smart contract execution or ambiguous terms can lead to high-value disputes in decentralized applications (DeFi, NFTs, staking platforms, etc.).

✅ Regulatory Uncertainty

Frequent changes in regulations can disrupt business operations for crypto startups, traders, and investors.

✅ Cross-Border Transactions

Legal jurisdiction becomes complex when disputes arise from international crypto transactions or asset tracing.

How CyberLex Advocate Can Help

We offer end-to-end legal services in the cryptocurrency and blockchain domain:

🔹 Crypto Compliance & Advisory

• AML/KYC advisory for exchanges and wallet operators

• Regulatory strategy and business structuring

• Tax planning and compliance for crypto holdings

🔹 Dispute Resolution

• Legal representation in disputes related to crypto fraud, smart contracts, and blockchain agreements

• Filing complaints and litigation in cyber fraud cases

• Assistance with filing FIRs and working with cybercrime cells

🔹 Crypto Recovery Support

• Tracing and recovering stolen or misappropriated crypto through legal and technical means

• Working with forensic blockchain analysts and international platforms

🔹 Drafting Legal Documents

• Whitepapers for crypto projects

• Tokenomics and investor agreements

• Smart contract audits and legal reviews

• Terms of use and privacy policies for blockchain apps

🔹 Litigation and Representation

• Filing writ petitions against unlawful account freezes or seizures of crypto assets

• Legal defense in investigations involving digital currencies

Key Indian Laws Related to Crypto (Indirectly Applicable)

Although there is no exclusive crypto law yet, the following legal frameworks are applied in crypto-related matters:

• Information Technology Act, 2000

  • Section 66C/66D: Identity theft and cheating using digital means

  • Section 43A: Compensation for failure to protect personal data

• Indian Penal Code, 1860

  • Section 420: Cheating

  • Section 406: Criminal breach of trust

  • Section 463/465: Forgery of electronic records

• PMLA (Prevention of Money Laundering Act)

  • Applicable to exchanges and individuals involved in large crypto transactions

• Income Tax Act, 1961

  • Imposes tax liability on crypto income under capital gains or business income