We live in a world where for as long as memory serves us cash has always been King. However, the rapid improvement in technology, simultaneously fast-tracked the evolution of money and the way transactions were conducted. Fast forward many years from the inception of metal coins as currency to 2009 where the world was introduced to the concept of cryptocurrency.
For the uninitiated a cryptocurrency is a decentralised form of virtual asset based on a network scattered across a huge network of computers outside the control of the central government or authorities.
Over the past decade or so, while the process has been slow, retail investors and institutions are slowly waking up to the positive aspects of cryptocurrency and are exploring ways to harness its benefits.
Crypto Tracker
The latest Chainalysis’ report, ‘Global Crypto Adoption Index 2023’, ranks India first amongst 154 nations in grassroots crypto adoption or the extent to which ordinary people in a country are adopting cryptocurrency for utilization in daily life.
With all this taking place outside the control of the Central monetary authorities, regulators were now forced to start paying closer attention to the buying, selling and mining of cryptocurrencies. The year 2013 saw The Reserve Bank of India (RBI) issue a circular, alerting users to the possible security-related risks associated with cryptocurrency.
In 2017, another circular from RBI, re-emphasised concerns regarding virtual assets or coins and in Q1 2018, a circular declared that it was illegal for banks and financial institutions to deal in virtual currencies or trade on virtual currency exchanges.
Two years later, the Supreme Court struck the circular down deeming it unconstitutional. The Government of India then decided to opt for a different approach and determined that virtual currencies should be regulated instead of being banned putting into motion the creation of a regulatory framework to be supported by the Reserve Bank and the Ministry of Finance.
Introduced in the Lok Sabha, The Cryptocurrency Bill of 2021, was an important milestone and the first step in attempting to regulate the flourishing Indian cryptocurrency market. This bill sets the guidelines for creating the official digital currency from the Federal Reserve Bank of India (RBI) that will support and use existing cryptocurrency technologies while banning all other existing private cryptocurrencies in India.
A report from Statista shows that the Indian cryptocurrency market is likely to touch $222.70 million by 2023 making it crystal clear that cryptocurrency is here to stay. Blockchain, and Web 3.0, the core technologies behind crypto have been already implemented across industries and are thought to be the foundation of the next big Metaverse trend.
This will go a long way in attracting foreign investments into India resulting in the creation of new jobs. Along with this, one can expect to see a huge increase in the volume of digital transactions especially with the use of central bank digital currencies (CBDCs) or the eRupee that allows for faster and cheaper transactions, financial inclusion, and lowers dependency on cash. The use of the eRupee as legal tender will make it easier for the government to monitor and track illicit transactions and crack down on money laundering.
Despite the uncertainties shown by the Government, the adoption of cryptocurrency, over the last two years clearly shows that cryptocurrency is the future currency. In the years to come, individual and institutional investors will enjoy a significantly greater transparency and accountability when trading on crypto trading platforms. Checks and balances to prevent fraud and monitor cross-border transactions will also be introduced.
All these progressive measures along with running education programmes to build awareness around the benefits of cryptocurrency will help to convince the Government to recognise cryptocurrencies, with the right interventions, as a safe channel for alternative financing making it a promising investment to diversify one’s portfolio in the long-run. With continued research, open dialogue, and responsible regulation, cryptocurrencies could very well find its place alongside traditional financial institutions, contributing to a more robust and equitable global financial system.
(The author, Mohammed Roshan Aslam, is Co-founder and CEO of GoSats)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
FAQs
Potential for Bans or Restrictions: The Indian government is considering a crypto bill that could potentially restrict or even ban cryptocurrencies altogether. This uncertainty discourages long-term investment and innovation in the crypto space.
Will crypto be legalised in India? ›
First off, owning and trading Bitcoin (and other cryptocurrencies) is legal in India. The Reserve Bank of India (RBI) classifies cryptocurrencies as "virtual digital assets" (VDAs). This indicates recognition for tax purposes, but they are not considered legal tender.
Will crypto survive in India? ›
A report from Statista shows that the Indian cryptocurrency market is likely to touch $222.70 million by 2023 making it crystal clear that cryptocurrency is here to stay.
What is the future of cryptocurrency in India? ›
The future of cryptocurrency in India is heavily influenced by government regulations and the stance of regulatory bodies like the Reserve Bank of India. The government has introduced measures such as a 30% tax on crypto asset profits and the potential introduction of a digital rupee .
What is the status of cryptocurrency in India? ›
Cryptocurrency is taxed under the category of virtual digital assets. The Indian government knows that virtual digital assets are a part of the international and Indian economy. They cannot be banned but a tax of 30% is charged on cryptocurrencies in India as announced in the union budget 2022.
Why crypto is not allowed in India? ›
Cryptocurrency exchanges like Binance, Kraken, Kucoin and others were banned in India by the FIU. The Director FIU IND wrote to the Secretary of Meity to block these exchanges as they were illegally operating without following the provisions of the PML Act in India.
Can cryptocurrency be converted to cash in India? ›
The first way in our guide on how to convert crypto to cash in India is through crypto exchange platforms like WazirX. After that, you can convert any crypto into cash through an exchange platform or a broker. This is similar to the currency exchange system at foreign airports.
Why crypto is booming in India? ›
Bitcoin is currently trading at $65,000 — around six per cent lower than its all-time high reached in November 2021. The Indian crypto market is experiencing a high, riding the wave of Bitcoin rally. This surge is largely driven by growing institutional interest.
Should we hold crypto in India? ›
Even though the country is yet to formulate regulations for investing in cryptocurrency, there was almost a 20,000% increase (from $200 million to $40 billion) in crypto investments in India in the past year alone! Several people rode the wave and reaped unparalleled returns on their investments.
Is it worth investing in crypto in India? ›
Yes, it is possible to invest in cryptocurrencies from India. However, it's important to note that the regulatory environment surrounding cryptocurrencies in India has been subject to changes and restrictions.
- Bitcoin (BTC)
- Ethereum (ETH)
- Solana (SOL)
- Avalanche (AVAX)
- Tron (TRX)
- Cardano (ADA)
- Polkadot (DOT)
- Chainlink (LINK)
Key Takeaways. Bitcoin, the cryptocurrency, is most likely to remain popular with speculators over the next decade. Bitcoin, the blockchain, will probably continue to be developed to address long-standing issues like scalability and security.
Is crypto growing in India? ›
Revenue in the Cryptocurrencies market is projected to reach US$343.5m in 2024. Revenue is expected to show an annual growth rate (CAGR 2024-2028) of 7.99% resulting in a projected total amount of US$467.2m by 2028.
Why was Binance banned in India? ›
In January, Binance was among nine offshore cryptocurrency platforms to be prohibited from operating in India through web addresses and mobile applications. The government's action was in response to the platforms' failure to comply with FIU and PMLA guidelines.
Is crypto taxable in India? ›
In India, cryptocurrencies are classified as virtual digital assets and are subject to taxation. Gains made from trading cryptocurrencies are taxed at a rate of 30% (plus 4% cess) according to Section 115BBH.
Which crypto exchange is legal in India? ›
In this article, we'll guide you through the crypto investment process and present the top four crypto exchanges in India—CoinSwitch, WazirX, Unocoin, and BitBNS—to help you choose the best crypto trading platform in India.
Is Coinbase legal in India? ›
Coinbase restricts people from certain countries, including India, from using its wallet service due to regulatory and compliance reasons. Coinbase is a U.S.-based company, and as such, it is subject to U.S. laws and regulations, including sanctions programs.
Is Binance legal in India? ›
Currently banned by the Indian government, crypto exchange Binance has reportedly received approval from the Financial Intelligence Unit (FIU) of the finance ministry to operate as a virtual asset service provider (VASP). As per an ET report, the unit also approved a similar application from Kucoin.
