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As the worldwide consumer base of cryptocurrencies has reached 200 million, the Indian crypto sector has seen a record increase in the number of crypto adopters. The number of active users is presently about 15 million, and the number of blockchain businesses has increased from 100+ in 2018 to 300+ in 2021. As per a recent survey by India's industry organization IndiaTech.org, Indian consumers now have substantial crypto assets of more than $1.5 billion and daily crypto trades between $350 to 500 million. Learn more about India's Attempt at Cryptocurrency Legalization.
Despite the fact that the banking prohibition on Indian cryptocurrency exchange was overturned by the Supreme Court on the grounds of proportionality, ICICI bank's newest decision occurred after the RBI urged the bank informally to cease crypto-related operations.
"We are simply following the RBI recommendations provided to us," an HDFC Bank official, who did not want to be identified, told Inc42. Our options are limited until and unless the regulator changes its attitude on cryptocurrency."
When asked why the RBI appears to be risking obstruction of justice, a senior officer informed Inc42 that he was unaware of ICICI Bank's new move, but that the central bank has the authority to restrict any method that may affect the Indian currency in any manner. In light of the fact that the finance ministry has said that cryptocurrencies have no inherent value and are not supported by any asset, the RBI must constantly monitor INR conversions to cryptocurrencies. The RBI official further stated that bitcoin as well as other cryptocurrencies' values are highly unstable and speculative in nature. The RBI cannot manage to battle on several fronts at a time when the nation's economy is struggling (mainly owing to the ongoing epidemic and recession).
The Indian government delivered another bombshell earlier this year when it announced that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be tabled in the Legislature's Budget Session. The Bill's goal is to make all private cryptocurrencies illegal in India and to set up a legislative regime for the RBI to create official digital money. The Bill would, however, allow for some exclusions in order to promote cryptocurrency's fundamental technology and applications.
Despite the controversy surrounding the Bill, it was not tabled in Parliament. Finance Minister Nirmala Sitharaman later stated on March 5 that the government was in negotiations with the RBI and will take a cautious stance on the issue.
As per Sitharaman, technology is moving at a breakneck pace throughout the world, and India cannot afford to stand still. India has blazed a trail in the fintech industry, and many countries are seeking to follow in its footsteps.
However, start-up advocacy groups including IndiaTech.org, IAMAI, Blockchain and Crypto Assets Council (BACC), and others are in regular contact with finance government authorities to discuss ways to improve the Indian crypto industry's clarity, openness, and transparency.
Nischal Shetty, the President and Chairman of WazirX, a crypto platform and trading platform currently owned by Binance, claimed that India is no more a niche industry but a rapidly developing financial sector during a webinar hosted by IAMAI and BACC. Despite the rise in cryptocurrency usage, the country lags behind others in terms of the regulatory framework and the range of potential crypto businesses. India requires its own crypto unicorns and more stringent laws, and the country must push its entrepreneurs to develop for cryptocurrency.
The Supreme Court ruled in March 2020 in the matter of RBI vs IAMAI and other similar issues involving the RBI notification dated April 6, 2018. However, the legality of cryptocurrencies in India is still being challenged. The supreme court is presently considering the PILs lodged by Siddharth Dalmia and Vijay Pal Dalmia on October 31, 2017, and Dwaipayan Bhowmick on November 6, 2017, challenging the Indian government for not prohibiting cryptocurrency in India.
The Supreme Court agreed to defer the Bhowmick and Dalmia cases for 12 weeks after bringing the testimony on February 8, 2021, just after the Indian government's attorney general, Tushar Mehta, notified the court that a bill to that consequence had already been submitted in Parliament. If the Bill is enacted, the Supreme Court is unlikely to overturn it.
The future of cryptocurrency in India is still up in the air, but Vivek Kathpalia, head of Nishith Desai Associates' Singapore office and technological advancements law leader, summed it up nicely during an IAMAI webinar: "India and Singapore are both beginning to emerge as fintech hubs, and we hope that regulatory framework in India will snag up with global best practices soon."
While a number of international players are looking at ways to enter the Indian market, the digital currency has yet to get formal approval. According to a business report, Kraken, Bitfinex, and KuCoin are racing to be the first to launch on the subcontinent, aftermarket leader Binance. Binance bought WazirX, a home cryptocurrencies start-up that allows consumers to buy and sell bitcoin using Indian rupees via the Binance Fiat Gateway, in 2019. Coinbase, a US-based alternative, has also announced intentions for an Indian back-office. Kraken, Bitfinex, and KuCoin are all among the top 10 exchanges in the world, according to the data portal CoinMarketCap, which ranks them based on traffic, liquidity, and the reliability of reported purchase and sale volumes. "The Indian market is huge, and it's just getting started. By now, if there had been more coverage certainty, Indian customers would have been spoiled for choice in terms of exchanges since everyone wants to be right here," said Kumar Gaurav, the founder of digital banking institution Cashaa. However, given the federal government has yet to set out a transparent method to legalize cryptocurrencies, it will not be simple.
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