Cloud Hosting

The cryptocurrency market is attracting Indian investors even with no legality assurance.

Despite the lack of regulations, the cryptocurrency market is gaining immense popularity in India. Approximately, Indians have invested about INR 49,189 crore (US$6.6 billion) in cryptocurrencies till May 2021. This is a staggering spike considering the numbers reflecting US$923 million till April 2020. As per cryptocurrency adoption and blockchain data firm Chainalysis, India ranks 11 out of 154 countries.

As cryptocurrency is still a new concept that just picked momentum in 2019-2020, more potential investors are expected to enter the crypto market in time. India has the biggest youth population in the world and millennials and Gen Z is navigating themselves towards cryptocurrencies. This expected spike is good for cryptocurrency exchange companies that operate in India but as there is no verdict on crypto acceptance from the government, this can become problematic.

In April 2018, Indias central bank ordered banks from dealing with cryptocurrency, suddenly. In March 2020, the Supreme Court of India turned down the order and that started the cryptocurrency hype in the country. While the citizens considered this is a green flag, the government is still on the fence about decentralized digital money. Recently, a panel was announced to look into this matter and form proper cryptocurrency regulations. While the RBI stated that there wont be a complete ban on cryptocurrency, future policies can bring significant changes, especially with the talks of launching a government-backed digital coin or Govcoins.

The lack of regulation doesnt just affect the investors, it also affects firms that work with crypto coins and invite threats. As said by Nischal Shetty, co-founder of WazirX, The biggest regulatory risk is that bad players might come into the ecosystem. While we, at exchanges follow a regulatory code of conduct, which is self-imposed, we cannot prevent others who dont follow it.

Indias cryptocurrency ecosystem has raised concern about a number of factors like payment solutions, taxation, and the legality of it all. Apart from investments, there is no provision in India to use cryptocurrencies as a means of payment for goods and services. Countries like the USA have organizations that accept cryptocurrencies like Bitcoin as payments and Africa have Bitcoin ATMs and mobile-cryptocurrency payments. The verdict on cryptocurrencies can be sorted if the RBI and the government put out a long-term plan for cryptocurrencies. India is one of the largest markets for businesses and with proper rules, they can make the most of the cryptocurrency features that promises privacy and security.

Recently, Germany opened the gates for cryptocurrency investments in the country and several other countries have shown their acceptance of this new technology. The global cryptocurrency ecosystem is growing rapidly with many projects and innovations happening, says Avinash Shekhar, co-CEO of ZebPay. These are investors, innovators, and businesses that offer job opportunities for many. Regulatory clarity around crypto can definitely help grow the crypto ecosystem in India.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, could lead to a ban of all private cryptocurrencies in the country. This will also pave way for a legislative framework for the official digital currency. Market experts speculate that the delay in announcing regulations maybe be because the officials are wrapping up the work for the digital rupee, like how China launched the digital Yuan. While Indians continue to invest in cryptocurrency, till the regulations are finalized, its similar to walking on eggshells.

Share This ArticleDo the sharing thingy

Read the original post:
Lack of Cryptocurrency Regulations Might Be a Red Flag for Indian Investors - Analytics Insight