The adoption of technological stuff has been slower in India compared to some other nations. A few decades back when computers were introduced there was a huge uproar by political parties who were sceptical as it would lead to job scarcity. Cut to 2021, and we cannot do without computers and diverse internet technologies. The same thing is happening with the cryptocurrency sector in India now. The Indian govt has been slow to come up with a definitive guideline or regulation for handling crypto transactions. This is despite the fact usage of cryptocurrency and related technologies are growing with each passing day.
Growth of the Indian crypto sector
Even a decade back, cryptocurrency was nothing more than a tech buzzword for Indians. Things have changed a lot in the last few years. People have started using online and digital technologies more than in the past and a section of Indian citizens has realized the untapped potential of Blockchain technologies. At first, people were sceptical about the safety of using and investing in the crypto sector-partly owing to the lack of any regulation and the absence of govt consensus on it. However, post-2018 there have been some developments that have set the ball rolling.
Growing instances of debit and credit card frauds have made users of digital technology seek safer and newer avenues. The prospect of using online transaction modes that are ungoverned and are devoid of intermediary charges have lured these users too. A number of crypto exchanges based in India have come up and the number of users and investors using these platforms has also shot up considerably. This has made the crypto sector experts upbeat about its growth prospects in India.
The hurdles- a bumpy ride for the Indian crypto sector
Like it has already been mentioned, the adoption of new technology in India does not come without its share of hurdles.
A section of financial sector experts is still not sure about the scope of cryptocurrencies replacing prevalent modes of digital transaction. It is not only about the approval of the govt, they are also worried about the innate volatility of the sector. The way the price of certain crypto tokens rise and fall, after tweets made by technology sector icons, is worrying according to them.
A section of financial sector experts alleges the Cryptocurrencies work much like the elements used in money-laundering schemes. They also point out the instances of large-scale crypto exchanges like Binance getting hacked, raising questions about the security.
The developments witnessed by the nascent Crypto sector in India
While crypto sector growth started gaining momentum in India in 2017, the first response from the govt or a govt backed financial entity came in 2018. It was in this year the RBI came up with a circular that prevented financial institutions and Indian banks from clearing cryptocurrency platform based transactions. This was a setback for the flourishing sector and early investors, for sure. On top of this, a Parliamentary committee voted against cryptocurrency regulation in 2019, asking for imposing a blanket ban on its usage.
Luckily, the apex court of India proved to be a saviour for the Crypto sector in India at that time. The Supreme Court gave a landmark verdict in 2020 that literally overturned the RBI ban on cryptocurrency transactions in India. However, a number of Indian banks still show reluctance in processing cryptocurrency platform based transactions.
The RBI seems to have changed its stance on the subject, of late. It asked the banks not to use the 2019 circular as a reason to deny people services for using cryptocurrencies.
The hurdles on the way notwithstanding, the Indian crypto sector is growing at a pace that defies predictions, according to industry experts. Post-2018, crypto token-based transactions have gone up significantly. To facilitate an increasing amount of crypto sector transactions and investments, India based cryptocurrency trading platforms like CoinDCX, CoinSwitch Kuber and WazirX have popped up. Polygon, a new era Blockchain scalability platform, set up by 3 Indians has also become popular.
What the future looks like for the crypto sector in India?
The seasoned crypto sector investors and users in India are eagerly waiting for the much talked about govt regulation on cryptocurrency. However, the govt is yet to clarify when that bill is going to be announced and implemented. Until that happens, it would be prudent to invest in the crypto sector with a bit of caution.
There are a few things new users and investors should keep in mind before investing in the crypto sector.
- The new Indian crypto exchanges are said to be safe and they deploy industry-standard safety protocols to keep user assets safe. However, as a cautionary measure you should evade the urge to invest a lot in these platforms, now. The fluctuations in the price of key crypto tokens in 2021 should act as a deterrent as well.
- The Supreme Court verdict overturning the 2018 RBI circular proved to be a relief to the crypto investors in India. However, the fact is the Supreme Court had stated there is no legitimate cause to ban usage of cryptocurrencies. This ruling may not remain the same forever.
- Many leading banking entities in the world are planning to launch their own Digital Currencies, referred as CBDC or Central Bank Digital Currencies and PBOC has launched its digital version already. It is likely that RBI will also come up with its own version of CBDC. The RBI governor has hinted at the same. When it is unveiled, that is likely to have a large impact on the crypto sector and crypto tokens used in India. While it will not be decentralized like cryptocurrencies, naturally a majority of people will prefer a digital currency backed by a central bank over crypto tokens.
