Can India Become Asia’s Cryptocurrency Epicentre? Maybe Not Yet!

With drastic investments spike, India has the potential to emerge as Asia's cryptocurrency epicenter

Ever since China banned its people from mining bitcoin, the ball is kept rolling in the court. Yes, being the biggest contributor to bitcoin mining, the Chinese government's announcement came as a blow to many cryptocurrency miners. The total crackdown on bitcoin in China has resulted in digital currency enthusiasts looking for an alternative country to be turned into Asia's cryptocurrency epicenter. The most possible candidate is India. India as a cryptocurrency leader could contemplate whatever China was doing. With a high population and growing technological adoption, Indian could soon become the cryptocurrency hub. But for now, the dream is quite far.

Amidst the uncertainty around regulations in India, crypto investors have adopted an optimistic approach towards digital currency investments. Although the Indian government is scaring citizens by saying that they could impose strict regulations on cryptocurrency trading in the country, Indian investors are less concerned about the moves. On the other hand, banks are being very cautious when it comes to dealing with digital currency. Most of the banks keep away from cryptocurrency-related debates, citing the Reserve bank of India's ban on crypto trading in 2018. But the actual market outcomes say otherwise. Indian investors are flocking to cryptocurrencies like never before and the trend could continue to drastically escalate.

Previously, only educated people who had knowledge about the cryptocurrency market invested in the digital currency sphere. But recently, a local wave of marketing and networking has influenced laymen to try their hand at cryptocurrency trading. Indians have invested nearly US$6.6 billion in cryptocurrencies until May this year, as compared to until April 2020. Remarkably, India as a cryptocurrency leader ranks eleven out of 154 nations in terms of cryptocurrency adoption. By evaluating the evolution of digital currency in India, the country has the potential to emerge as Asia's cryptocurrency epicenter.

Regulations in India

The fintech sector has opened its door for disruptive trends since the beginning of the pandemic. Cryptocurrency trading was one of the trailblazing concepts that Indians caught in the Covid-19 breeze. As the popularity of digital currencies like Bitcoin, Ripple, Dogecoin, etc has attracted Indian's attention, the world's second-largest population started heavily investing on the cryptocurrency radar.

The Indian government's opposition to cryptocurrency trading has a long way back to 2013. Being an untapped medium of exchange and investment, Indian crypto investors flooded the cryptocurrency market once for all. Seeing the drastic surge in digital currency investment, the Reserve bank of India (RBI), has issued a press release, cautioning the public against dealing with virtual currencies including Bitcoin. Following this, the Government of India constituted a high-level Inter-Ministerial Committee in 2017 to report on various issues pertaining to the use of digital currency. The committee concluded that India should impose a blanket ban on the decentralized finance system.

On the other hand, the top bank was also acting hard on cryptocurrency investors. In 2018, the RBI issued a circular preventing all commercial and cooperative banks, small finance banks, payment banks, and NBFC from dealing with any kind of virtual currency trading. However, the Supreme Court in 2020 lifted the cryptocurrency trading ban.

Overtaking the past crypto investment stories, Indians are taking a big interest in the digital currency market for the past year. The Indian government, being a governing body, was initially considering a total cryptocurrency ban, but later obliged to reconsider the move. Currently, the Indian government is validating to introduce a new bill titled 'Cryptocurrency and Regulation of Official Digital Currency Bill, 2021,' which is intended to ban private cryptocurrencies in Indian with certain exceptions to promote the underlying technology and trading of cryptocurrency and provide a framework for creating an official digital currency which will be issued by the RBI.

The future of cryptocurrencies in India

Cryptocurrency skeptics opine there is a good reason to believe that eventually, governments across will wipe out cryptocurrency trading. Or maybe their anticipation could be false. Although governments vary to allow a decentralized mode of finance work under their nose, it is unlikely that all the authorities across the globe could impose a ban on digital currencies. Especially, Indian Finance Minister Nirmala Sitharaman has said that there won't be a total ban on the use of cryptocurrency in the country. The positive moves point that India could evolve as Asia's cryptocurrency epicenter in the future.

But on the negative side, skeptics worry that instead of becoming a cryptocurrency leader, India could end up as the next Nigeria in terms of crypto trading. Similar to gambling, the already impoverished people of Nigeria blindly invested in cryptocurrency with the belief that their story will also turn into a fairy tale one day. Considering the growth in digital currency investment in India so far, the officials need to keep their guard up in order to prevent the company from falling off the cliff.