There’s a common misconception that the Supreme court overturned the RBI’s ban on cryptocurrency, which makes crypto legal in India. The actual position is more nuanced than that.
The RBI’s ban was never on crypto trading itself. What the RBI’s circular (see here) said was that entities regulated by the RBI (Such as banks, NBFCs, payment service providers etc.) would not be allowed to have any transactions relating to virtual currencies. The ban was thus on financial institutions, which were banned from settling any crypto-related transactions in rupees. This ban on RBI-regulated entities was overturned in early 2019 by the Supreme Court.
The onus to regulate cryptocurrencies is actually on the Government, not the RBI. Since the government hasn’t passed any regulations governing crypto yet, the industry construes this to mean that crypto is legal until the government explicitly bans it.
That said, the Ministry of Finance has taken a pretty strong stance along the lines of ‘Blockchain is good, Cryptocurrencies are bad’. There is a draft legislation which is currently under discussion, which seeks to ban cryptocurrencies outright in India, and has some pretty strong penalties (10 year jail terms etc.)
The industry is lobbying for a relook at the draft legislation. While they’ve succeeded in planting the seed of doubt in the regulator’s minds, whether the industry succeeds in convincing the government of the benefits of crypto is anyone’s guess at this point.
All in all, this is a pretty grey area right now from a regulatory perspective.