Between Innovation and Illegality: Cryptocurrency and the Quest for Legal Certainty in India

Cryptos have had a troubled past, with nation-states quickly banning, taxing, and legalizing them. With the identification of chosen cryptocurrencies as ‘strategic reserves’, cryptos are entering a revolutionary period where DeFi is becoming TradFi. The fast growth and investor interest in cryptocurrencies is a double-edged sword for India. They provide financial inclusion, fintech innovation, investment, and economic growth. Cryptos, on the other hand, increase systemic volatility, cybersecurity vulnerabilities, consumer protection shortfalls, and illegal financial flows including money laundering and terror funding. Multifaceted elements fit India's distinct socio-economic setting. This study discusses cryptocurrency criticisms from the perspectives of volatility, security, transparency, intrinsic value, decentralization, and percolation after tracing the growth of cryptography technology in India. The study proposes a legal framework for legalizing and integrating cryptocurrencies in India, drawing from the US, EU, Japan, and other growing nations. It concludes with socio-environmental crypto adoption problems. The article expands on the Supreme Court's Shailesh Babulal Bhatt v. State of Gujarat & Ors. ruling.