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Comment by wsxcde | Hacker News Reader

I see random people confidently asserting that btc isn't illegal in India. Don't listen to them. Talk to a tax lawyer.

If you're in India, the sensible thing to do is to stay away from bitcoin. This is based on my conversations with my brother who is a tax lawyer. According to him the legality of btc and the laws that govern its purchase/sale in India aren't clear at all and there is an expectation that the RBI will clarify the regulatory framework and the laws that they believe apply to btc. He also believes that RBI has historically favoured extremely conservative interpretations so they will likely shoot down btc. This is obviously not legal advice, not least because it's coming through a lossy channel (me).

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This is interesting. So your brother thinks that in the near future the RBI will say that Buying bitcoin is a crime.

Bitcoins will be the same as cocaine or .. well in India sex toys also share similar status.

I personally find it quite unlikely that a democratic country will prohibit it's citizens from transacting in something like bitcoin. But hey, crazier things have been known to happen.

However, I'd like to ask. Why preemptively assume that bitcoin will be declared illegal ?

I can understand that the RBI is conservative and they forced Paypal to create automatic bank account withdrawals, etc. Basically move everything into their system so that people cannot store huge sums of money in their Paypal accounts.

But how would they go about outlawing bitcoin ? I'm curious about the technical as well as political aspects of such an event.

I think countries like Germany and Singapore may have been the first to realize that there isn't really much you can do to 'ban' bitcoin. You just have to play ball and then come up with solutions as problems come up. A move like China wouldn't be possible in Germany (maybe in Singapore though.. yes..).

As far as I know importing/exporting any currency in India is controlled, so unless it's explicitly permitted by the regulators, buying bitcoin can be treated as smuggling currency over the border without declaring it and (IANAL) it's a crime in India.

How would they go about outlawing bitcoin? The same as cash deals, catch some of them and prosecute them harshly enough to scare others from making the practice widespread.

Well, a long-term ban on personal BitCoin usage (i.e. merely mining and sending/receiving) is unenforcable. More likely a ban would target the commercial means of acquiring BitCoin. So mining enterprises and exchanges and payment processors would be the targets of any ban just like in China with the latter two. If you make it impractical to buy or otherwise obtain BitCoins then you've as good as outlawed it, allowing only small, black market, person to person exchanges.

Very well put.

Even if they were to make possessing bitcoin illegal, enforcing something like this is impossible.

At best, they can close the Indian exchanges (why is again: bad) but this cannot stop people from transferring funds abroad and trading on a foreign exchange.

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