India's Crypto Economy
India's Crypto Economy is a brand-new weekly newsletter (delivered every Thursday) from Inc42 to help you decode the rapidly growing crypto economy and its implications on business, work and life. We launched this newsletter on the 4th anniversary of our weekly series “Crypto This Week” which completed 190 editions in May, 2021.
There has been utter confusion over the future of cryptocurrency in India. While Finance Minister Nirmala Sitharaman has maintained that a complete ban on cryptocurrency is not being considered, media reports citing government sources have suggested that the Reserve Bank of India has strongly recommended a ban on the blockchain-based currency in the country. Another report from news agency Thomson Reuters suggested that the government will go for a ban on cryptocurrency in India.
The government’s carefully veiled statements and a slew of contradictory media reports have made it impossible for anyone to predict what India’s bill on cryptocurrency will entail for the future of the sector.
On Sunday, FM Nirmala Sitharaman suggested that a complete ban on cryptocurrency may not be on the cards, as she promised that the government will not shut all options and a “window will be left open to allow experiments in the cryptocurrency space.”
This could mean that the government will illegalise the use of cryptocurrencies as a form of payment, and instead regulate it as an asset class. Most Indian crypto stakeholders have never promoted the use of cryptocurrencies as legal tender but instead, talk about crypto as a new-age asset class that promises better returns than existing options such as gold and mutual funds.
Bitcoin, the world’s biggest cryptocurrency, hit a record high of $60,000 briefly on Saturday, nearly doubling in value this year. Globally, Bitcoin is also gaining acceptance as a form of payment with various institutional investors buying huge amounts of the cryptocurrency.
Talking to Inc42 about the FM’s statement, Sumit Gupta, cofounder and CEO of Mumbai-based crypto exchange CoinDCX said, “The very fact that the FM has mentioned a willingness to experiment, shows the government’s resolve in bringing a digital revolution. Collaborative efforts between stakeholders like us and the government is a must. Research and development will provide scope for a robust fintech ecosystem to be developed in India. The focus will be to build and explore new indigenous products and financial technologies while strengthening our monetary policies and accelerating technological development.”
Hours after the FM’s statement, a Reuters report, citing sources, claimed that India will propose banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets.
According to the report, the bill, titled “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021,” would criminalise possession, issuance, mining, trading and transferring of crypto-assets.
In January, the bill was listed in the Lok Sabha bulletin for the ongoing budget session. The synopsis of the bill reads: “To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
According to industry estimates, 7 Mn Indians hold over $1 Bn worth in cryptocurrencies. No official figures are available, yet.
Bitcoin & Ethereum Prices
At the time of writing, Bitcoin was trading at $55,243, an increase of 1.92% over the last seven days.
Ethereum was trading at $1,798, a fall of 2.43% from last week’s price.
Bitcoin Falls After Weekend Record High as India Considers Cryptocurrency Ban
Bitcoin dropped on Monday, falling from a record high above $60,000 (roughly Rs. 40 lakhs) over the weekend, as investors digested a potential ban from India on cryptocurrencies. Read the full Gadgets360 story here.
India Will Have A Window For Crypto, Blockchain Experiments: FM Sitharaman
Finance Minister Nirmala Sitharaman has reiterated the government’s stance on allowing a window for experiments in Bitcoin, blockchain and cryptocurrency, and suggested that a blanket ban may not be instituted on these new-age financial technologies.