15 million Indians have invested $2 billion in cryptocurrency. Is it a bubble? Or an opportunity? A lot depends on how the regulatory framework takes shape.

Please listen to the latest episode of All Indians Matter.

An estimated 15 million Indians have invested over $2 billion in cryptocurrency. Depending on who you choose to believe, cryptocurrency is a wealth creation opportunity like no other or a bubble that will put the dotcom meltdown to shame. Regulators, naturally, are faced with a tough ask – how do you allow the frothy, exciting fintech sector to flourish while ensuring investor security and checks against misuse?

Cryptocurrency is a digital asset, a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, which can be traded for the company’s offerings. Think of them as casino chips – you need to exchange real currency for the cryptocurrency. Cryptocurrencies are based on Blockchain, a decentralized technology spread across many computers that manages and records transactions and is said to be extremely secure. It is what is known as distributed-ledger technology.

At this time, more than 6,700 different cryptocurrencies are traded publicly.

Bitcoin, perhaps the best-known, is considered a hot investment, rallying 400% over the past year. And it’s not just millennials who’re buying it in India – industry estimates say that since January 2021 people above 45 years of age have been showing a keen interest in it.

The crypto universe has been in the news for other reasons recently – Bitcoin went into freefall from $65,000 in April to below the $40,000 mark. And the volatility continues. That puts the focus firmly on regulation of cryptocurrencies.

So, are cryptocurrencies legal in India? And what is the government’s stand on them?

After vacillating for a long time, the government took the first step towards regulation. The Ministry of Corporate Affairs made it mandatory for companies to disclose crypto trading and investments, which experts see as a positive step. It is aimed at curbing illegal trading and the use of cryptos to conceal black money. Such disclosures will also mean better, more transparent corporate governance.

So, while you can trade in cryptocurrencies, India is a long way from having a robust regulatory framework.

The government had formed an inter-ministerial committee on November 2, 2017, to study virtual currencies. Its report highlighted the positive aspect of distributed-ledger technology and suggested applications for it in financial services. However, the government wasn’t convinced about cryptocurrencies and proposed a blanket ban on them.

Accordingly, in April 2018, the Reserve Bank advised all entities under its jurisdiction to not deal in virtual currencies or provide services to anyone dealing with them. The Finance Ministry too issued a statement saying: “The government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities or as part of the payment system.”

In mid-2019, a government committee suggested banning all private cryptocurrencies with a jail term of up to 10 years as well as heavy penalties for those dealing in them. However, the Supreme Court in March 2020 overturned the ban and so cryptos are legal.

The current thinking within the industry is that a strict set of regulations will be put into place sometime this year. These currencies are already taxable and the regulations are expected to detail a tax regime specifically applicable to them.

All of this comes on the back of the rising popularity of Blockchain in areas such as identity management, smart contracts and supply chain. Cryptocurrency is perhaps the best known use case for Blockchain. The global user base increased by 190% between 2018 and 2020 to 200 million, driving the market capital of cryptocurrency to $2 trillion in April 2021.

India has been a global driver of the technology ecosystem, so it should be well placed to seize this opportunity.

There is no definitive count of how many Indians deal in cryptocurrencies but, judging from the trading levels, industry estimates peg the number at 15 million. Their holdings are estimated at Rs 15,000 crore and monthly trading volumes at Rs 60,000 crore.

What worries the government and observers is the volatility and decentralised nature of cryptocurrency. After all, cryptocurrencies are not issued by a government-controlled centralised authority the way, say, the rupee is minted by the Reserve Bank of India.

The industry can help by offering solutions to the concerns. A whitepaper with detailed recommendations was submitted to the government by IndiaTech.org, an internet start-up association.

First of all, it recommended, stop treating cryptos as currencies and look upon them as digital assets. By doing this, you take away the uncertainty around it being a currency competing with the rupee. Register Indian crypto exchanges and have foreign direct investment limits – just like we do with banks – and establish checks and balances, the report added. Among these are mandatory KYC of all cryptocurrency holders, notified accounting standards and disclosures through entities like chartered accountants.

There are also recommendations on anti-money laundering checks, taxation, traceability, disclosure, trading limits and source disclosure.

With the correct regulation, combined with the fast-growing digital economy, India can be home to a Blockchain boom – just as we did with information technology and information technology enabled services.

15 million Indians have invested $2 billion in cryptocurrency. Is it a bubble? Or an opportunity? A lot depends on how the regulatory framework takes shape.
Please listen to the latest episode of All Indians Matter.
<hr>
An estimated 15 million Indians have invested over $2 billion in cryptocurrency. Depending on who you choose to believe, cryptocurrency is a wealth creation opportunity like no other or a bubble that will put the dotcom meltdown to shame. Regulators, naturally, are faced with a tough ask &ndash; how do you allow the frothy, exciting fintech sector to flourish while ensuring investor security and checks against misuse?
Cryptocurrency is a digital asset, a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, which can be traded for the company&rsquo;s offerings. Think of them as casino chips &ndash; you need to exchange real currency for the cryptocurrency. Cryptocurrencies are based on Blockchain, a decentralized technology spread across many computers that manages and records transactions and is said to be extremely secure. It is what is known as distributed-ledger technology.
At this time, more than 6,700 different cryptocurrencies are traded publicly.
Bitcoin, perhaps the best-known, is considered a hot investment, rallying 400% over the past year. And it&rsquo;s not just millennials who&rsquo;re buying it in India &ndash; industry estimates say that since January 2021 people above 45 years of age have been showing a keen interest in it.
The crypto universe has been in the news for other reasons recently &ndash; Bitcoin went into freefall from $65,000 in April to below the $40,000 mark. And the volatility continues. That puts the focus firmly on regulation of cryptocurrencies.
So, are cryptocurrencies legal in India? And what is the government&rsquo;s stand on them?
After vacillating for a long time, the government took the first step towards regulation. The Ministry of Corporate Affairs made it mandatory for companies to disclose crypto trading and investments, which experts see as a positive step. It is aimed at curbing illegal trading and the use of cryptos to conceal black money. Such disclosures will also mean better, more transparent corporate governance.
So, while you can trade in cryptocurrencies, India is a long way from having a robust regulatory framework.
The government had formed an inter-ministerial committee on November 2, 2017, to study virtual currencies. Its report highlighted the positive aspect of distributed-ledger technology and suggested applications for it in financial services. However, the government wasn&rsquo;t convinced about cryptocurrencies and proposed a blanket ban on them.
Accordingly, in April 2018, the Reserve Bank advised all entities under its jurisdiction to not deal in virtual currencies or provide services to anyone dealing with them. The Finance Ministry too issued a statement saying: &ldquo;The government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities or as part of the payment system.&rdquo;
In mid-2019, a government committee suggested banning all private cryptocurrencies with a jail term of up to 10 years as well as heavy penalties for those dealing in them. However, the Supreme Court in March 2020 overturned the ban and so cryptos are legal.
The current thinking within the industry is that a strict set of regulations will be put into place sometime this year. These currencies are already taxable and the regulations are expected to detail a tax regime specifically applicable to them.
All of this comes on the back of the rising popularity of Blockchain in areas such as identity management, smart contracts and supply chain. Cryptocurrency is perhaps the best known use case for Blockchain. The global user base increased by 190% between 2018 and 2020 to 200 million, driving the market capital of cryptocurrency to $2 trillion in April 2021.
India has been a global driver of the technology ecosystem, so it should be well placed to seize this opportunity.
There is no definitive count of how many Indians deal in cryptocurrencies but, judging from the trading levels, industry estimates peg the number at 15 million. Their holdings are estimated at Rs 15,000 crore and monthly trading volumes at Rs 60,000 crore.
What worries the government and observers is the volatility and decentralised nature of cryptocurrency. After all, cryptocurrencies are not issued by a government-controlled centralised authority the way, say, the rupee is minted by the Reserve Bank of India.
The industry can help by offering solutions to the concerns. A whitepaper with detailed recommendations was submitted to the government by IndiaTech.org, an internet start-up association.
First of all, it recommended, stop treating cryptos as currencies and look upon them as digital assets. By doing this, you take away the uncertainty around it being a currency competing with the rupee. Register Indian crypto exchanges and have foreign direct investment limits &ndash; just like we do with banks &ndash; and establish checks and balances, the report added. Among these are mandatory KYC of all cryptocurrency holders, notified accounting standards and disclosures through entities like chartered accountants.
There are also recommendations on anti-money laundering checks, taxation, traceability, disclosure, trading limits and source disclosure.
With the correct regulation, combined with the fast-growing digital economy, India can be home to a Blockchain boom &ndash; just as we did with information technology and information technology enabled services.

All Indians Matter is a digital home for conversations with and about India on the issues that truly matter. For most of our post-Independence years, this was done by the news media. However, in recent times, the media have been found wanting. As a result, the issues that should be highlighted are sidelined and the voices that should find a megaphone are muffled. This podcast is an effort to engage with everyone who cares about India, its Constitution, its liberal and secular values.

All Indians Matter is the creation of Ashraf Engineer, who was a senior journalist with some of India’s leading newspapers for 17 years. His media work included a stint in 2011 in Afghanistan, where he trained and mentored journalists. He subsequently quit the news media and is now part of the brand communication industry.

-x-x-x-
You can reach at: editor@allindiansmatter.in.Ashraf Engineer
He is also active on social media:
Twitter: @allindianscount
Instagram: @allindiansmatter
Facebook: https://www.facebook.com/All-Indians-Matter-116123149932432

The views, information, or opinions expressed during this podcast are solely those of the hosts and/or guests appearing on the podcast and do not reflect the views of Ideabrew Solutions Pvt. Ltd (Ideabrew Studios).

Ideabrew Solutions Pvt. Ltd. and its respective parents, subsidiaries, affiliates, successors, assigns, employees, agents, directors, officers and shareholders does not assume any liability or responsibility nor endorses the views, information, or opinions expressed by the guest.

Under no circumstances will Ideabrew Solutions Pvt. Ltd. assume direct or indirect responsibility or liability which may arise from the views, information, or opinions expressed by the guest including but not limited to claims for defamation, libel, slander, infringement, invasion of privacy and publicity rights, obscenity, pornography, profanity, fraud, or misrepresentation.

Ideabrew Solutions Pvt. Ltd. has no control or endorsement over the views, information, or opinions expressed by the guest but is a mere distributor / interviewer and merely acting as a passive conduit for the distribution of this podcast, Ideabrew Solutions Pvt. Ltd. does not warrant that the views, information, or opinions in the podcast are accurate, complete, or true.

Any views or opinions in the podcast are not intended to malign any religion, ethnic group, club, organisation, or individual. 

All Indians Matter is a digital home for conversations with and about India on the issues that truly matter. For most of our post-Independence years, this was done by the news media. However, in recent times, the media have been found wanting. As a result, the issues that should be highlighted are sidelined and the voices that should find a megaphone are muffled. This podcast is an effort to engage with everyone who cares about India, its Constitution, its liberal and secular values.
All Indians Matter is the creation of Ashraf Engineer, who was a senior journalist with some of India’s leading newspapers for 17 years. His media work included a stint in 2011 in Afghanistan, where he trained and mentored journalists. He subsequently quit the news media and is now part of the brand communication industry.
-x-x-x-
<ul>
<li>You can reach at: editor@allindiansmatter.in.Ashraf Engineer</li>
<li>He is also active on social media:</li>
<li>Twitter: @allindianscount</li>
<li>Instagram: @allindiansmatter</li>
<li>Facebook: https://www.facebook.com/All-Indians-Matter-116123149932432</li>
</ul>
The views, information, or opinions expressed during this podcast are solely those of the hosts and/or guests appearing on the podcast and do not reflect the views of Ideabrew Solutions Pvt. Ltd (Ideabrew Studios).
Ideabrew Solutions Pvt. Ltd. and its respective parents, subsidiaries, affiliates, successors, assigns, employees, agents, directors, officers and shareholders does not assume any liability or responsibility nor endorses the views, information, or opinions expressed by the guest.
Under no circumstances will Ideabrew Solutions Pvt. Ltd. assume direct or indirect responsibility or liability which may arise from the views, information, or opinions expressed by the guest including but not limited to claims for defamation, libel, slander, infringement, invasion of privacy and publicity rights, obscenity, pornography, profanity, fraud, or misrepresentation.
Ideabrew Solutions Pvt. Ltd. has no control or endorsement over the views, information, or opinions expressed by the guest but is a mere distributor / interviewer and merely acting as a passive conduit for the distribution of this podcast, Ideabrew Solutions Pvt. Ltd. does not warrant that the views, information, or opinions in the podcast are accurate, complete, or true.
Any views or opinions in the podcast are not intended to malign any religion, ethnic group, club, organisation, or individual.

All Indians Matter

All Indians Matter is a digital home for conversations with and about India on the issues that truly matter. For most of our post-Independence years, this was done by the news media. However, in recent times, the media have been found wanting. As a result, the issues that should be highlighted are sidelined and the voices that should find a megaphone are muffled. This podcast is an effort to engage with everyone who cares about India, its Constitution, its liberal and secular values.

All Indians Matter is the creation of Ashraf Engineer, who was a senior journalist with some of India’s leading newspapers for 17 years. His media work included a stint in 2011 in Afghanistan, where he trained and mentored journalists. He subsequently quit the news media and is now part of the brand communication industry.

You can reach the team at: editor@allindiansmatter.in.

Ashraf Engineer is also active on social media:
Twitter: @allindianscount
Instagram: @allindiansmatter
Facebook: https://www.facebook.com/All-Indians-Matter-116123149932432

DISCLAIMER:

The views, information, or opinions expressed during this podcast are solely those of the hosts and/or guests appearing on the podcast and do not reflect the views of Ideabrew Solutions Pvt. Ltd (Ideabrew Studios).

Ideabrew Solutions Pvt. Ltd. and its respective parents, subsidiaries, affiliates, successors, assigns, employees, agents, directors, officers and shareholders does not assume any liability or responsibility nor endorses the views, information, or opinions expressed by the guest.

Under no circumstances will Ideabrew Solutions Pvt. Ltd. assume direct or indirect responsibility or liability which may arise from the views, information, or opinions expressed by the guest including but not limited to claims for defamation, libel, slander, infringement, invasion of privacy and publicity rights, obscenity, pornography, profanity, fraud, or misrepresentation.

Ideabrew Solutions Pvt. Ltd. has no control or endorsement over the views, information, or opinions expressed by the guest but is a mere distributor / interviewer and merely acting as a passive conduit for the distribution of this podcast, Ideabrew Solutions Pvt. Ltd. does not warrant that the views, information, or opinions in the podcast are accurate, complete, or true.

Any views or opinions in the podcast are not intended to malign any religion, ethnic group, club, organisation, or individual. 

All Indians Matter is a digital home for conversations with and about India on the issues that truly matter. For most of our post-Independence years, this was done by the news media. However, in recent times, the media have been found wanting. As a result, the issues that should be highlighted are sidelined and the voices that should find a megaphone are muffled. This podcast is an effort to engage with everyone who cares about India, its Constitution, its liberal and secular values.
All Indians Matter is the creation of Ashraf Engineer, who was a senior journalist with some of India’s leading newspapers for 17 years. His media work included a stint in 2011 in Afghanistan, where he trained and mentored journalists. He subsequently quit the news media and is now part of the brand communication industry.
<hr>
You can reach the team at: <a href="mailto:editor@allindiansmatter.in">editor@allindiansmatter.in</a>.
Ashraf Engineer is also active on social media:
<ul>
<li>Twitter: @allindianscount</li>
<li>Instagram: @allindiansmatter</li>
<li>Facebook: https://www.facebook.com/All-Indians-Matter-116123149932432</li>
</ul>
DISCLAIMER:
The views, information, or opinions expressed during this podcast are solely those of the hosts and/or guests appearing on the podcast and do not reflect the views of Ideabrew Solutions Pvt. Ltd (Ideabrew Studios).
Ideabrew Solutions Pvt. Ltd. and its respective parents, subsidiaries, affiliates, successors, assigns, employees, agents, directors, officers and shareholders does not assume any liability or responsibility nor endorses the views, information, or opinions expressed by the guest.
Under no circumstances will Ideabrew Solutions Pvt. Ltd. assume direct or indirect responsibility or liability which may arise from the views, information, or opinions expressed by the guest including but not limited to claims for defamation, libel, slander, infringement, invasion of privacy and publicity rights, obscenity, pornography, profanity, fraud, or misrepresentation.
Ideabrew Solutions Pvt. Ltd. has no control or endorsement over the views, information, or opinions expressed by the guest but is a mere distributor / interviewer and merely acting as a passive conduit for the distribution of this podcast, Ideabrew Solutions Pvt. Ltd. does not warrant that the views, information, or opinions in the podcast are accurate, complete, or true.
Any views or opinions in the podcast are not intended to malign any religion, ethnic group, club, organisation, or individual.

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