{"id":5978,"date":"2020-08-05T15:28:20","date_gmt":"2020-08-05T19:28:20","guid":{"rendered":"https:\/\/cointelegraph.com\/magazine\/?p=5978"},"modified":"2020-08-06T11:40:11","modified_gmt":"2020-08-06T15:40:11","slug":"india-cryptocurrency-industry","status":"publish","type":"post","link":"https:\/\/cointelegraph.com\/magazine\/2020\/08\/05\/india-cryptocurrency-industry","title":{"rendered":"State of Play: India’s Cryptocurrency Industry Prepares For A Billion Users"},"content":{"rendered":"

Digital assets appeared to be leaving India behind.<\/strong> Just four years after the advent of Bitcoin, hopes of a thriving crypto-economy in one of the world\u2019s most populated countries were fading rapidly.<\/span><\/p>\n

“Regulation comes only when people are doing certain business, and we come to understand that something wrong is happening,\u201d said the Reserve Bank of India\u2019s then Deputy Governor, KC Chakrabarty in 2013, warning the public against the sale and issuance of cryptocurrencies. <\/span><\/p>\n

\u201cFirst of all, we don’t understand this subject.\u201d<\/span><\/p>\n

Over the next few years, the RBI continued to issue <\/span>several more warnings<\/span><\/a> to banks, businesses, and the general populace, doubling down on their claims that cryptocurrencies posed systemic risks to the nation\u2019s economy. On paper, things looked terrible for crypto in India. In reality, the business was booming.<\/span><\/p>\n

Cryptocurrency exchanges in India saw unprecedented volumes in 2017 when Bitcoin was at its most valuable. Later that year, Indian online payment gateway and billion-dollar company BillDesk launched its own exchange, Coinome, further clarifying the country\u2019s sentiments towards the reserve bank\u2019s warnings.<\/span><\/p>\n

A petition was signed by exchanges against the Reserve Bank, and the Delhi High Court issued a notice to RBI regarding the petition. Kunal Barchha, co-founder and CEO of cryptocurrency exchange CoinRecoil, even wrote a letter to Indian Prime Minister Narendra Modi in an effort to find a solution.<\/span><\/p>\n

While the petition gradually wound its way into the hands of the Supreme Court, the RBI stood their ground, approving income tax raids on several exchanges and forcing many crypto-based businesses out of the country. So this year, on March 4th, when the Supreme Court <\/span>rejected<\/span><\/a> the RBI\u2019s proposed ban on the trade and use of cryptocurrencies, it\u2019s perhaps only a slight exaggeration to suggest that an entire nation rejoiced.<\/span><\/p>\n

Yet the lack of a clear regulatory framework continues to make India a risky place in which to invest.<\/span><\/p>\n

Despite the Supreme Court\u2019s verdict, there are still several issues that need to be addressed before the crypto market can truly reach its full potential. While the judgment against RBI provided some relief to crypto enthusiasts, it didn\u2019t eliminate the hostility banks continue to generate towards the crypto space.<\/span><\/p>\n

Reports show that certain banks still refuse to provide services to individuals and businesses dealing in cryptocurrencies. Some of them have even resorted to freezing accounts whose owners were found participating in peer-to-peer sales, and blocking international wire transfers from blockchain and crypto-based companies.<\/span><\/p>\n

The banks defend this behavior by claiming they are awaiting an official notice from the RBI, practically disregarding the judgment of the Supreme Court.<\/span><\/p>\n

Belavadi Technology Solutions recently received a blockchain patent from USPTO for innovation in Bitcoin script usage, which could allow for reversible transactions on the blockchain. Instead of India, Belavadi is planning to launch in Australia or Singapore due to uncertain regulation in the country. Ramesh BN, Belavadi Director said:<\/span><\/p>\n

\u201cWe are not willing to risk customer funds while the RBI flip-flops policies. Since the RBI has not announced any official policy for sending and receiving crypto, it is unclear how to do so without violating the law. We are preparing to move an injunction against the RBI in the Delhi High Court.\u201d<\/span><\/p><\/blockquote>\n

Back in the saddle?<\/span><\/h4>\n

The official green-light from Indian authorities has caused a surge in trade volumes on domestic exchanges, and rekindled many businesses that had wound down operations in light of regulatory concerns. Indian crypto-enthusiasts don\u2019t have to rely on loopholes to manage their digital assets any more, while businesses and exchanges no longer need to worry about being stifled by harsh regulation.<\/span><\/p>\n

In response to a Right to Information <\/span>filing<\/span><\/a> (RTI) by Unocoin co-founder BV Harish, the RBI even clarified that there would no longer be any prohibition on banks providing services to businesses dealing in cryptocurrencies.<\/span><\/p>\n

The National Association of Software and Service Companies (NASSCOM) also commented on the Supreme Court\u2019s verdict, stating, \u201cWe welcome the Supreme Court\u2019s decision to lift RBI\u2019s ban on trading in cryptocurrency. We believe that banning tech is not the solution, a risk-based framework must be developed to regulate and monitor cryptocurrencies and tokens.\u201d<\/span><\/p>\n

Post-verdict, global cryptocurrency exchange giant Binance announced a $50 million <\/span>fund<\/span><\/a> for investing in crypto and blockchain startups in India. They also acquired major Indian exchange WazirX, and became a member of the Indian Tech Association, a key organization that aided in the Supreme Court\u2019s rejection of the RBI\u2019s proposal.<\/span><\/p>\n

From what once appeared to be bleak prospects, India\u2019s crypto industry is marching forward to bring one of the biggest technological revolutions of our time to the country. With reports suggesting that cryptocurrency trading has seen a <\/span>400% uptick<\/span><\/a> during the COVID-19 lockdown, there is high potential for India to become one of the most valuable players in the global crypto economy.<\/span><\/p>\n

Earlier this year, celebrated American venture capitalist Tim Draper, who had been vocal in his criticism toward the Indian government regarding their consideration of a crypto ban, announced plans to invest in a number of promising cryptocurrency-based startups in the country.<\/span>
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A renaissance for India. Now crypto is legal. #bitcoin<\/a> #india<\/a> https:\/\/t.co\/6KuEel2tQK<\/a><\/p>\n

\u2014 Tim Draper (@TimDraper) March 21, 2020<\/a><\/p><\/blockquote>\n