Cryptocurrencies including bitcoin are unlikely to be declared illegal in India as per the government official who informed one of the leading online business portal. Further as told, despite their continuance as a legal virtual currency, the legal framework or body which shall regulate is not clear.
The fate of the currency still hangs as the appointed panel is still not formulating regulations for it. As per the source "Discussions till now suggest that bitcoin will most likely fall under the ambit of the RBI [Reserve Bank of India]. But some are of the opinion that bitcoin is a security rather than a currency and should be regulated by Sebi [Securities and Exchanges Board of India],"
To control the functioning of such currency form, the government in April had formed an inter-disciplinary committee by the special secretary (Economic Affairs) for examining the current framework around virtual currencies. The committee was also asked to submit its report in 3 months time covering information on the current status of the currency both in relation to global aspect and domestically; study around legal and regulatory structure for virtual currency globally; any other matter of material importance; and measures such as money laundering and consumer protection with regard to use of bitcoin.
Since the demonetization, bitcoin has also gained momentum in India and the concern has come to fore as its likely use to launder money.