The Reserve Bank of India (RBI) banned all banking transactions by crypto traders two years ago, calling it ring-fencing. It was not an immediate ban, but mere restrictions on those doing it. In March this year, the Supreme Court (SC) intervened and threw out the ban.
Perhaps, the withdrawal of restrictions could not have come at a better time, just as the pandemic hit and the nation went into lockdown. Reports indicate thousands of new investors registered with the many crypto exchanges across India to trade in cryptocurrencies.
Eliminating The RBI Ban Boosts Crypto Adoption
Due to the Coronavirus, the global economy and global indices like the dollar and petroleum prices tanked. However, Bitcoin, designed to be macro economy-proof with its security and transaction ecosystem, took off in India. Even gold, widely believed to be the best antidote to an economic downturn, is only up 30 percent of the pandemic, while Bitcoin is up 160 percent and still rising.
Nischal Shetty, CEO of WazirX, stated that their monthly trading volume has grown by 470 percent since removing the crypto ban.
Crypto exchanges recognized possibilities of the ban lift and intensified operations. One such business, Coinswitch Kuber, told mint that it enrolled 400,000 users in India in just four months. Many of these new users were less driven by the crazy expectations for 2017 and maybe more loyal to that segment.
In a recent tweet, VR Gaming Cafe announced that one could pay for their gaming services using Nano, getting responses that cryptocurrency was not legal in India.
In their defense, they stated that they agreed that it is not legal, as of now. Continuing, “But is there any law that outlines that it is illegal? Maybe this is still kind of grey. We are a small business, and of course, we ought to play according to the local laws. Overall, we need regulation and more clarity from the Govt.” It gives a clear overview of the cryptocurrency situation in India.
Regulating Crypto in India
There were rumors in the Treasury Department after the National Assembly lifted the RBI crypto ban that the center could introduce laws or regulations to circumvent the decision. Still, so far, there’s no official seal on it. The Indian Internet and Mobile Device Association is already in talks with government officials and regulators trying to establish a legal framework under which cryptocurrencies can legally trade in the country.
Financial sector giants like Mastercard and PayPal have already joined the cryptocurrency space. Countries like Japan, Australia, South Korea, and Switzerland have expressed their interest in institutionalizing cryptocurrencies.
Shetty hopes that India will take a cue from them and bring in favorable regulations as it will lead to more startups building in blockchain, more jobs, and more tax revenue for the government.