Is NFT legal in India?

Non-Fungible Tokens ("NFTs") are the newest craze in the Indian NFT marketplace today. They're effectively a certificate of ownership for crypto assets, and they use the same blockchain technology as cryptocurrencies. Furthermore, trading in NFTs is now only available through cryptocurrencies. The similarities between cryptocurrencies and NFTs, however, end there. Cryptocurrencies are interchangeable or "fungible," however each NFT is one-of-a-kind and so cannot be traded like a cryptocurrency, thus the name "non-fungible." NFTs can also represent tangible assets, allowing for physical asset exchange on a Crypto NFT marketplace.

NFTs may represent a wide variety of objects, including artwork, GIFs, trading cards, and even virtual real estate. Despite the fact that the essential feature of digital production is a limitless supply, NFT allows for the ownership of specific Digital art NFT. The underlying idea is to limit the endless supply of digital creations, hence increasing the value of those creations. While several copies of that artwork may exist on the internet, the NFT owner owns the original, and an extravagant amount of money is paid for these digital "bragging rights."

WazirX, Zebpay, and other crypto-trading platforms have already started their own virtual Indian NFT marketplace. With NFTs hitting the Indian market and sales surging at an all-time high, it's critical to examine them from a legal perspective.

The Cryptocurrency Problem:

The legal ambiguity surrounding the legal legality of cryptocurrencies in India is perhaps the most significant impediment to Crypto NFT trading, because, as previously noted, NFTs are only tradeable in cryptocurrencies. Furthermore, to date, all Indian NFT marketplace that has begun trading in NFTs are cryptocurrency exchanges. Despite the fact that cryptocurrencies are not illegal in India, the Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019 pushes for a full prohibition. Those who trade in bitcoin face a fine or perhaps jail under the law.

Furthermore, the government's position on cryptocurrencies changed dramatically in early 2021, with the Finance Minister indicating that the government was not planning a full ban on cryptocurrency and that it would allow individuals to experiment with it. The RBI also issued circular instructing banks not to rely on the 2018 circular, which was overturned by the Supreme Court of India.

As a result of this disagreement, there is no clear understanding of the legal status of cryptocurrencies in India, which makes trading in crypto NFT riskier.