The journey of cryptocurrency in India has been nothing less than a roller-coaster ride. Faced with restrictions, now amid fears of stricter regulations, this virtual asset has faced several serious challenges. Despite the uncertainty surrounding the future of cryptocurrencies in India, the trend of investing in unregulated digital assets, especially bitcoin, has increased significantly post-2020. Data from several domestic cryptocurrency exchanges shows that 15-20 million Indians have invested in this virtual asset. With this, it has gone to the level of 10 billion dollars in November this year. The way of investing in the country has been changed by the increasing number of cryptocurrency adopters, who till now have been investing in gold and other safe assets. Ahead of the much-awaited Cryptocurrency and Regulation of Official Digital Currency Bill, let’s take a look at the journey of virtual assets so far.
2008: The Beginning of Cryptocurrencies
The cryptocurrency journey began in 2008 with the publication of a paper titled “Bitcoin: A Peer to Peer Electronic Cash System” by a developer under the pseudonym of Satoshi Nakamoto.
2010: First sale of crypto
Two years later, bitcoin was sold for the first time when a man paid 10,000 bitcoins for two pizzas. Thus, for the first time, cash value was associated with cryptocurrencies. Cryptocurrencies such as Litecoin, Namecoin and Swiftcoin emerged shortly after, and the digital asset became increasingly popular.
2013: RBI issues first circular related to cryptocurrencies
With crypto investments increasing in India and exchanges like Zebpay, PocketBits, Coinsecure, Koinex and Unocoin emerging, the Reserve Bank of India (RBI) issued a circular in 2013 warning users about the potential risks associated with virtual currencies.
2016-2018: Demonetization and RBI’s banking ban on crypto
The preference for digital payments due to the use of demonetization has given an unwanted impetus to crypto investments and attracted tech savvy customers to these virtual assets. Indian banks continued to allow transactions on cryptocurrency exchanges, prompting the RBI to issue another circular in 2017 to allay its apprehensions about virtual coins. Finally, in late 2017, the RBI and the Finance Ministry issued a warning saying that virtual currencies are not legal tender.
In March 2018, the Central Board of Digital Taxes (CBDT) submitted a draft scheme for a ban on virtual currencies to the finance ministry, and exactly a month later, the RBI allowed banks, NBFCs and payment system providers to deal with virtual currencies and use virtual currency. Issued a circular prohibiting exchanges from providing services. This dealt a big blow to the crypto exchanges and their trading volume fell by 99 percent.
November 2018 : #IndiaWantsCrypto
Founder immobile Shetty Vjiraks after 10 November L, 2018 Nakamoto paper introduced #IndiaWantsCrypto campaign for positive regulation of crypto in. Its initial impact came to the fore, when it received a positive response from Rajya Sabha MP Rajeev Chandrasekhar. The campaign later Unocoin the ontological Vishwanath, Poligon co-founder Jubilee Kanani, renowned Entrepreneur and investor Anthony Pompliano and DJ Nikhil Chinappa also joined. Nischal’s consistent tweets and support for the campaign gained widespread acceptance with the hashtag trending on Twitter during the budget session in February, where the crypto bill was announced. #IndiaWantsCrypto completed 1000 days in July 2021 and the campaign continues to go strong with Nischal’s tweets and millions of crypto supporters joining in.
March 2020: Supreme Court sets aside crypto banking ban
The ban was a major setback and led to crypto exchanges filing writs in the Supreme Court. Eventually the ban was vacated, the RBI circular declared unconstitutional.
Thus the cryptocurrency exchanges revived and the SC’s decision came at the best of times, coinciding with the crypto boom.
2021: Crypto Bill announced
However, the struggle for cryptocurrencies in India is not over yet. On January 29, 2021, the Indian government announced that it would introduce a bill to create a sovereign digital currency and that private cryptocurrencies would automatically be banned. In November 2021, the Standing Committee on Finance met with representatives from the Blockchain and Crypto Asset Council (BACC) and other cryptocurrencies. It concluded that cryptocurrencies should not be banned, rather they should be regulated. In early December, 2021, a meeting on cryptocurrencies was chaired by Prime Minister Narendra Modi with senior officials.
bottom line
Going by the current indications, a strong regulatory framework will be implemented for cryptocurrencies in India. A decision will also be taken on which regulatory body will look into this issue. It is more likely that the government will treat crypto as an asset class, not a currency. Experts are of the opinion that the regulations will bring more transparency and increase the credibility of crypto trading platforms. Steps can also be taken to prevent fraud and monitor cross border transactions. Despite the uncertainty over the future of unregulated digital assets, the acceptance of cryptocurrencies has grown exponentially over the past two years, making India its largest investor. So, it will be interesting to see what turn the journey of crypto in India takes after the bill is introduced in the Parliament.
Disclaimer: Cryptocurrency is an unregulated digital currency. It is not a legal currency and is subject to market risks. The views and opinions expressed in this article are the personal views and opinions of the author. This should not be construed as any investment advice or official opinion of WazirX.
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