According to foreign media reports, a large number of Indian investors are rushing into the cryptocurrency market in an unprecedented way, but from the current point of view, this trend is extremely risky.
As of May this year, the size of the Indian cryptocurrency market was nearly 6.6 billion U.S. dollars (491.89 billion rupees); compared to April last year, this figure was only about 923 million U.S. dollars. The market has increased by more than 700% year-on-year.
Some industry insiders said that the current growth of the Indian market is still the tip of the iceberg, and there will be more Indian investors pouring in in the future. Data provided by the blockchain data tracking platform Chainalysis shows that among the 154 countries that have been counted, India’s cryptocurrency scale ranks 11th.
Harish BV, CEO of Unocoin, an Indian cryptocurrency exchange with 1.3 million users, said: “India has a population of 1.39 billion, among which young people with a relatively high proportion of the population are more proficient in technology and more adaptable to cryptocurrency savings.”
Despite the current growth trend, some Indian cryptocurrency exchanges have more confidence to attract funds from global investors. But all this requires a prerequisite-the Central Bank of India and the government have not intervened in the crypto market, and have not yet issued any relevant standardized laws and regulations. In view of the past entanglements between the Indian government and the cryptocurrency market, this hidden worry will become more prominent in the future.
India’s cryptocurrency boom
In April 2018, the Central Bank of India decided to restrict banks from engaging in cryptocurrency-related transactions. The decision was rejected by the Supreme Court in March last year, which also led to an explosive growth in the demand for cryptocurrencies in India.
The Reserve Bank of India (RBI) issued a statement on May 31, notifying it not to use its 2018 statement on prohibiting banks from providing services to cryptocurrency platforms or investors. Since then, the authorities have remained silent. At present, cryptocurrency exchanges and investors have regarded the latest notice issued by the Reserve Bank of India as a common explanation. Given the current scale of investment, this level of risk may be more damaging.
The action of the Reserve Bank of India is likely to be a signal to lift the comprehensive ban on cryptocurrencies, although India still has not introduced standardized laws and regulations for cryptocurrencies. Therefore, the market still needs to remain cautious about any future policy changes.
In addition to the government’s unclear position on cryptocurrencies, investors also face other risks related to the lack of market supervision. Indian crypto exchange WazirX CEO Nischal Shetty said, “The biggest regulatory loophole in the current crypto market is that some unscrupulous participants may enter the trading system. Although most people can follow the relevant regulatory codes of conduct on the exchange, we cannot stop some participants. Bad behavior.”
India’s cryptocurrency market has experienced many issues related to payment solutions, taxation, and legal status, but if the government and the Reserve Bank of India can change their previous views and attitudes to the industry, these issues will be solved.
“With the emergence of many projects and innovations, the global cryptocurrency ecosystem is booming. These related investors, entrepreneurs, and companies have also provided employment opportunities for many people. Regulations around the crypto market will undoubtedly help the Indian market. Healthy development.” said Avinash Shekhar, CEO of ZebPay, an Indian Bitcoin wallet startup based in Singapore.
Shekhar also suggested that clear regulation of cryptocurrencies will mean that cryptocurrencies can become the same assets as sovereign currencies and become part of the economic market.
The cold war between the crypto market and government regulation
At present, the Indian government is considering the introduction of the “Encrypted Currency and Official Digital Currency Regulatory Act of 2021”, which may ban all private cryptocurrencies in India and establish a legislative framework for official cryptocurrencies. However, for now, the enthusiasm of investors is still Did not fade away.
Last week, Indian Finance Minister Nirmala Sitharaman said that the government has prepared a draft policy on cryptocurrency, which provides a window for pilot projects and experiments by fintech companies.
“We have listened to the opinions of all stakeholders, and the cabinet’s record is ready. We can only wait and see the changes and wait for the cabinet to consider and pass this draft before we can initiate the bill.” Sitharaman is accepting India Said in a media interview.
Some people believe that the delay in submitting the draft is due to the fact that the Reserve Bank of India is developing its own central bank Crypto currency and that the crypto market is “still out of state.”
Nischal Shetty, CEO of Indian crypto exchange WazirX, said, “In fact, cryptocurrency is a new technology, and the unknown nature of this new technology also makes the Indian government and central bank skeptical about it. All regulators are related to the financial sector. , But it has nothing to do with the technical field. And when a technology that has been deeply entrenched in the field of science and technology suddenly appears in the financial field, for the regulators, they face great challenges to regulate this market.”