India taxes cryptocurrencies. It requires crypto exchanges to verify customers, report suspicious transactions and comply with anti-money laundering laws. Enforcement agencies investigate cross-border crypto transfers, while courts have begun deciding disputes involving digital assets. Yet Parliament has never answered a more fundamental question: what exactly is a cryptocurrency in the eyes of Indian law?

That legal contradiction has come back into focus after the Reserve Bank of India (RBI) reiterated before the Parliamentary Standing Committee on Finance earlier this month that cryptocurrencies are difficult to regulate and should not be legalised. The central bank has consistently argued that private cryptocurrencies threaten…