The world’s largest democracy is one of the many markets in which digital currencies have gained a foothold. Although India has closed the door on bitcoin trading through banks, its rapidly growing economy shows great potential for disruption through cryptocurrency technology. 

Considering that only 9% of Indian citizens currently use bank accounts, it’s possible that cryptocurrencies could have a profound impact on daily financial transactions in India.

Five ways by which Bitcoin disrupts the insurance industry in India

1) The Indian Government is not supporting Bitcoins, but it allows the public to transact using virtual currency. However, it has introduced taxes for both buyers and sellers of bitcoins. 

This means that India’s issuance and acceptance of digital currencies are not legal tenders. However, Indians can transact with other individuals or virtual currencies (like Bitcoin). “

2) The lack of clear directives from the Indian Government has led to a lack of trust in Bitcoins. Moreover, this also creates a situation where many people are confused as it’s still not clear whether Bitcoins will be treated as an asset or currency under the IT Act and other existing laws. As a result, there is a lot of ambiguity around the legal status of Bitcoins in India.

3) Lack of awareness is another reason behind the slow growth of bitcoin traders in India. Most Indians are not aware of virtual currencies or how they work. Hence, only a fraction of the population is using bitcoins at present. If you want to invest in bitcoin, then you can visit the official platform of bitcoin trading.

4) The RBI has banned Indian financial institutions from dealing with virtual currencies directly. But buying and selling bitcoins is not forbidden, and individuals can still trade them on exchanges or through P2P transactions.

5) Indian Government has imposed a tax of 18% on all bitcoin sales and purchases and imposed a capital gains tax of 20%. There are no regulations for virtual currencies in India, though the RBI has warned that those dealing in virtual currencies do so at their own risk.

Five reasons why Bitcoin disrupts the insurance industry in India

1) Most small and medium business owners do not have insurance, which is critical for their growth. If they invest some percentage of income in buying bitcoins, they can use them as an investment vehicle and invest in other traditional instruments like shares, bonds, etc. Thus, Bitcoin act as an asset to people, which is why banks and financial institutions started investing in Bitcoins.

2) Both individuals and organizations can purchase insurance using bitcoins. If you have a product that has no demand in an offline market but can sell online, you should offer your customers the option of purchasing that product using bitcoins. In addition, many online stores are offering their products using bitcoins, thus increasing their utility.

3) Bitcoin exchanges provide services by which you can quickly buy or sell your Bitcoins. Most of these exchanges are based on US Dollars or Japanese Yen, due to which the Indian Government has become strict in regulating them under rules and regulations of Income Tax Act 1961. 

If Insurance companies start offering insurance policies on bitcoins, it would be easier for exchanges to become fully compliant. All financial activities will be recorded and stored by Insurance companies.

4) The Reserve Bank of India has said that life insurance companies should not accept payment through Bitcoins. However, this step does not affect the usage of Bitcoins as a capital investment or in any other form.

5) Bitcoins do not take up a lot of memory so that you can store your Bitcoin Wallet at multiple places, and it is entirely secure. This also gives Insurance companies an edge over the traditional method of transactions as they can get access to more customers.


The Indian Government is clear about its part on Bitcoins. They are not legal tender, and people dealing with them do it at their own risk, but the RBI has not banned these currencies completely. The usage of bitcoins in the Insurance industry can create many positive effects for small and medium business owners in India, so the Indian Government should encourage its usage in various forms.