Crypto in India, Massive Room for Growth

With the Indian government giving positive signals on the adoption of crypto and blockchain technology, the market is clearly ripe for massive growth throughout India for both Klever and crypto.

Though cryptocurrencies have become a talking point across the globe, in India, it’s still far behind the race.

Even though Bitcoin, the first cryptocurrency has been around since 2009, in India it only truly started attracting people’s attention during the 2017-18 bull run.

During the same period, many cryptocurrency exchanges were set up offering platform for users to buy and sell Bitcoin and other crypto assets, but due to huge volatility, the Reserve Bank of India (RBI) issued a circular and bared domestic financial institutions from working with companies that were dealing with Bitcoin and other cryptocurrencies. 

In that 2018 circular, RBI stated that adoption of cryptocurrency could destabilize India’s traditional financial system and also said that digital tokens cannot be treated as currencies, since they do not exist in physical form backed by the government.

After this, many exchanges had to close down, while some left the country and migrated to more crypto friendly nations. 

When the RBI imposed a ban, many blockchain and crypto companies went to court to overrule the decision, and after nearly two years, the Supreme Court lifted the ban on 4 March 2020.

Even after the ban was lifted, financial institutions were still blocking accounts that were trading in crypto, citing the previous RBI order. But in June 2021, RBI issued a clarification that the circular issued in April 2018 was null and void.

However, after the clarification, RBI governor Shaktikanta Das said that the central bank’s position on the trading of cryptocurrency in India remains unchanged, and it has major concerns about its impact on the country’s financial stability.

As per an estimate, today only five million citizens out of 1.39 billion Indians are holding cryptocurrencies, worth roughly $1.5 billion, of which a majority is in Bitcoin (BTC) and Ethereum (ETH).

Massive Room for Growth

Good news for crypto growth and adoption eventually came, and most recently the tiny nation of El Salvador announced the legal tender of Bitcoin as an official currency. With this move, many smaller countries are now mulling to go that route.

India too, which was looking to totally ban cryptocurrencies in the past, has now looked into the importance of blockchain and the problems it can solve for the country.

After the RBI circular, the central bank was mulling to launch its own Rupee-backed digital currency, called Rupee Coin,a project that is still under discussion. The central government is also mulling a crypto policy, which is expected to be unveiled next month or in the fall.

Blockchain Research

Apart from this, many state governments in India have released their own blockchain policy, and are actively using blockchain technology in land registry, finance, insurance, education, health, manufacturing, and other sectors.

NITI Ayog, an economic policy making body of the central government, suggested in its report “Paper Blockchain: The India Strategy” released in January 2020 that the country needs to develop its own national blockchain infrastructure, IndiaChain, which would deploy blockchain solutions with inbuilt fabric, identity platform and incentive platform.

It also recommended a stablecoin for Indian Rupee for seamless exchange powered by blockchain technology. This project may be in conjunction with the need for re-evaluating cryptocurrencies as a whole given the growing rise in popularity among the Indian public.

The report also emphasized the need to develop a regulatory policy for evolving a vibrant blockchain ecosystem and that India can become a blockchain hub for promotion of research and development, in addition promoting a skilled workforce in the sector.

In March 2021, Indian finance minister, Nirmala Sitaraman said that the government is not putting a blanket ban on cryptocurrencies and that the legislation “Cryptocurrency and Regulation of Official Digital Currency Bill” will be soon taken for discussion in the parliament. 

She also emphasized that the government has taken stakeholders’ inputs into account and will allow a certain amount of window for people to experiment on blockchain and Bitcoin.

The NITI Ayog report also claimed it will study whether there is a need for an initial coin offering (ICO) market, in what could become the possible contours for facilitation of an ICO market in India that encompasses all the required regulatory concerns.

Klever in India

India has now turned into Klever’s second largest market in terms of active users worldwide, after the United States and ahead of Nigeria. It’s a powerful combination when you allow a self-custody wallet like Klever to get in the hands of million of unbanked Indians who are taking their first steps into the world of crypto.

With the Indian government giving positive signals on the adoption of crypto and blockchain technology, the market is clearly ripe for massive growth throughout India for both Klever and the cryptocurrency market as a whole.

Written by Jagdish Kumar,

Klever News Editor

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