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Indian cryptocurrency market

Coinbase Bogged Down By Indian Authorities’ Pressure Tactics, Heads Out

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In a major development, leading US-based cryptocurrency exchange Coinbase has decided to leave the Indian market within three days of its launch. Brian Armstrong, the co-founder, and chief executive said because of “informal pressure from the government and the Reserve Bank of India”.

On April 7, Coinbase launched its crypto trading service in India which allowed its clients in the nation to buy crypto via UPI [unified payments interface].

But the platform’s operations were left paralyzed after the National Payments Corporation of India [NPCI], the body that manages UPI, made a bizarre claim that it was “not aware of any crypto exchange using UPI.

“Speaking on last month’s fiasco in the first quarter 2022 earnings call on May 10, Armstrong made a bold statement that the informal pressure from the government and RBI could be in violation of the Supreme Court of India’s ruling, which had overturned the central bank’s ban on cryptocurrency.

“India is a unique market in the sense that the Supreme Court has ruled that they can’t ban crypto, but there are elements in the government there, including at Reserve Bank of India, who don’t seem to be as positive on it,” Coinbase’s CEO said in its speech.

“And so they in the press, it’s been called a shadowban; basically, they’re applying soft pressure behind the scenes to try to disable some of these payments, which might be going through UPI,” he added.

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Coinbase Bogged Down By Indian Authorities' Pressure Tactics, Heads Out 2

In 2018, the Reserve Bank of India had earlier banned cryptocurrency, a decision overturned by the nation’s apex court over two years ago, but the central bank continues to informally exert pressure on banks from engaging with cryptocurrency exchanges.

Coinbase’s exit is just the beginning of the end?

India’s crypto market is in a dire state as several crypto firms and talents unable to find any alternative routes are exiting India to friendlier shores. TronWeekly previously reported on Indian cryptocurrency exchange WazirX’s co-founders, Nischal Shetty, and Siddharth Menon relocating to Dubai with their families.

In another shocker, India’s GST Council is mulling imposing 28 percent Goods and Services Tax on cryptocurrencies, as per media reports.

According to those reports, the GST Council has formed a committee to look into the proposal of levying 28% GST on all activities and services related to cryptos. The proposal might be tabled before the Council in its next meeting.

Everything about India’s first Crypto Index, IC15

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India’s first crypto Index called IC15 debuts on the super-app CryptoWire which will evaluate the performance of the 15 most widely traded cryptocurrencies listed on leading crypto exchanges by market capitalization. For the uninitiated, an index such as these, captures over 80 percent of market movement is essentially a market tracking and assessing tool. Through such tool, investors would be able to make better decisions and in turn ensures transparency. The announcement assumes significance as, cryptocurrencies have emerged as an asset class in themselves, gaining wider acceptance and drawing people’s interests over the past years.

Managing Director of CryptoWire, Jigish Sonagara while launching IC15 stated,

This will not only push the ‘learn before earn’ initiative but also serve the industry with yet another powerful intervention. Our approach is to facilitate market development and mitigate risk to a great degree by presenting all possible tools to evaluate possibilities and make decisions.

According to sources, the Index has been ‘designed to provide insights into crypto mining and present an accurate benchmark and a mirror of the underlying crypto market, acting as a barometer of the industry in a sense, with a diversified representation of overall market sentiments.’ But how will it work?

India’s IC15 working mechanism

Sources at CryptoWire informed that it has formed a Index Governance Committe which consists of industry and domain experts that will choose crypto assets from the top 400 by market cap. To be considered for the index, the asset must meet certain criterias such as the token must have traded on minimum 90% of the days during the review period. On top of that it should be among 100 most liquid cryptoassets and also in top 50 in terms of circulating market capitalization. Accordingly the committee will select the 15 such eligible cryptocurrencies.

Notably Indian government, Reserve Bank of India [RBI] and The Securities and Exchange Board of India or SEBI have been cautioning people about the risk factor in these virtual assets. Moreover the highly anticipated Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which was included in the Lok Sabha Bulletin-Part II for introduction in the recently concluded Winter Session could not be introduced in Parliament by the government.

Crypto market crashes on Indian exchanges amidst ban FUD

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Amidst the huge regulators’ involvement and FUD, Indian crypto exchanges witnessed a sudden panic selling which resulted in a midnight crash dumping the dollar-linked stable coin tether (USDT) by 25% to nearly 60 Indian Rupees ($0.8061). This happened just after the news on the cryptocurrency bill went viral on Wednesday.

The global crypto market has started gaining some bullish momentum after around a 20% global drop in the past few weeks, but the Indian market saw something totally different.

The crash wasn’t just limited to Tether but also reflected on multiple top coins, including king coin Bitcoin (BTC), largest altcoin Ethereum (ETH), meme coins Shiba Inu (SHIB) and Dogecoin (DOGE), and Metaverse hero Sandbox (SAND).

The crypto price crash

The crash occurred soon after the so-called “government-funded” media channels created FUD around crypto. An interview on a local media channel even said that the only choice Indians have is to sell all their cryptocurrencies and never return back.

As per local sources, the Indian government is reportedly planning to roll out a bill seeking to ban private tokens while allowing specific exceptions to support blockchain technology.

The announcement of the bill came through the Parliament, which stated that the country would introduce and list 26 new bills, including the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the upcoming Winter session.

The bill seeks a legislative vote and discussion over creating an official virtual currency while banning “all private cryptocurrencies,” starting Monday.

The major sell-off on the Indian exchange platform WazirX this morning at 3:30 am UTC slipped the Bitcoin price by around 15%, from 4,600,000 rupees (around $61,800) to 3,917,659 rupees (around $52,600) within two hours. Other popular coins like Ethereum and Cardano also fell by double-digit losses on the exchange.

Statements from founders

Nischal Shetty, CEO of the WazirX, said that the Indian market usually trades above the global market. He added that the latest events might lead to Indian markets reaching the global market levels.

Bitcoin market CEO Caroline Bowler said that the current ban is for the short-term and would be a step backward. He added that banning could not protect investors.

How India plans to craft the new Cryptocurrency law

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India’s Prime minister Narendra Modi presided over a high-level meeting, discussing ways to manage the burgeoning cryptocurrency sector. The meeting, as per the government sources, was the result of detailed consultation held with the Reserve Bank of India, the Finance Ministry, as well as domestic and international experts. Sources revealed that an agreement was reached to adopt progressive and forward-looking measures, while at the same time concerns were raised against the ‘unregulated sector’ from being used as a weapon for ‘money laundering and terror activities’.

Alarms were particularly raised with regards to a recent advertisement by the country’s leading crypto community who claimed that crypto investments have reached a staggering 600K crore. Sources said that the leadership viewed such marketing, both online and offline, as attempts to entrap individuals into speculating in this market.

On the crypto investment issue, sources divulged that the Reserve Bank of India is maintaining a close watch on such resources being transferred from banks to digital exchanges and is currently collecting data from the financial institutions, periodically. It is noteworthy to mention that the country’s top regulator has repeatedly expressed concerns with regards to its acceptance as a legal tender and even banned crypto transactions, a few years ago.

Later Supreme court struck down the ban in 2020 deeming cryptocurrency as not illegal but only an unregulated commodity. Despite that, the RBI maintained its stance and continued to express uneasiness over the digital asset industry. In a recent event, RBI governor Shaktikanta Das said,

“On crypto…we have serious concerns from the point of view of macroeconomic and financial stability. How the issue has to be dealt with — we have given our detailed suggestions to the government; as far as I know the matter is under the active consideration of the government and the government will decide.”

Latest developments in India’s crypto roadmap

The parliamentary committee on Finance has scheduled a meeting on Monday next week inviting cryptocurrency stakeholders and industry experts to discuss the emerging opportunities and challenges in the sector. In brief, the recent developments are a clear indication that India is on the cusp of drafting a legal framework and providing much-needed clarity for the country’s crypto community.

India working towards a “balanced” crypto law: Source

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India’s leadership is contemplating how to take a balanced stance on cryptocurrencies. The government is in the process of finalizing legislation on the crypto-asset industry which may be presented this year in the coming winter session of Parliament. A source close to the administration revealed that an absolute ban on cryptocurrency would be extreme and unfeasible considering the large-scale investments by both retail and institutions in India.

The government source speculated that the upcoming laws will be more balanced and is likely to address all relevant concerns of the stakeholders. In an interview with a leading newspaper, the person stated,

A balance has to be found. A middle path that balances the concerns of all stakeholders is more likely.

Recently, a meeting was held in the presence of policymakers, including from the finance ministry, which discussed the benefits and pitfalls with regards to other country’s regulatory stances on the cryptocurrency industry. The detailed presentation also weighed in on the crypto investments steered by Indians.

To top that, the Reserve Bank of India’s [RBI] position on the issue was put forward in the meeting. The gov representative divulged that the taxation part arising out of crypto trading would be discussed and finalized in the next scheduled presentation. The source also mentioned it would then go to the Cabinet for final considerations after the legal vetting.

Indian gov’s position on cryptocurrency

Previously, a high-profile government panel proposed a total ban on all forms of cryptocurrencies back in 2019. Subsequently, it had introduced a fine of up to $33.74 million and jail terms of 10 years to any individual dealing in them.

The hard-stance drastically changed when in August this year, India’s Finance minister Nirmala Sitharaman had stressed that the government would not put a blanket ban on the crypto assets but would instead adopt a “wait and watch” approach to understand how this emerging sector would benefit the fintech industry at its maximum potential.

To sum things up, the Indian government and the regulatory agencies have so far failed to provide much-needed clarity in finalizing the rules that could benefit the crypto players and other stakeholders. Only time will tell if the authorities are able to stitch a “balanced” yet progressive crypto law.

China FUD sends Indian crypto investors into a frenzy

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The latest announcement by Chinese central bank, People’s Bank of China [PBoC] with regards to making all crypto transactions illegal has sent Indian investors into massive sell-offs. Cardano [ADA], Polygon [Matic], and Solana [SOL] have been investor favorites for quite some time but the latest news witnessed many market players cashing out. As many resorted to offloading their assets, others settled for the dominant cryptocurrencies like Bitcoin [BTC] and Etherium [ETH] as FUD intensified in the market following the development.

Coinciding the news, popular Indian crypto exchanges have recorded a 50% rise in the volume of transactions in a span of two days. Experts believe that the rush was attributed to those who invested in the crypto with smaller market caps. However, seasoned investors remained unfazed by the recent turn of events.

Indian cryptocurrency exchange, BuyUcoin’s founder Shivram Thakral stated,

“The largest sell-offs we’ve seen are in the biggest gainers as investors are likely to cash out their investments in assets like Cardano, Solana, Matic”

According to him, China’s ban set off alarm bells among the newbie investors into a dumping spree while others traded for the safer assets. Previously Bitcoin [BTC] was the most preferred token for Indian users until recently many new investors started exploring other altcoins.

Can China’s loss be turned into an opportunity for India?

The recent crackdown has nevertheless drawn a lot of attention from the global crypto community. However, not many were surprised. China has a long history of targeting crypto-related activities be it Bitcoin and crypto mining or clampdown on exchanges and businesses.

This has resulted in mass exodus and shifting of operations to crypto-friendly countries such as Bahamas, Kazakhstan as well as parts of the US, Canada, etc. On the other hand, with its growing tech-savvy population and prudent steps towards bringing the much-needed regulatory clarity, India can provide a huge market by attracting crypto-related business and capital. Drafting new legislation compatible with the burgeoning technology and providing support to crypto-related startups is the need of the hour.

India’s Cryptoeconomy Could Help In Closing SME Financing Gap

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Owing to it to COVID-19, India’s economy has fallen on hard times. The lack of regulatory clarity in terms of cryptocurrency trading, holding, and business operation, for instance, have been tough for the people in the region.

The government of the country is reportedly clinging on to the goal of becoming a $5 trillion economy by the year 2024-25 and had previously highlighted that the infrastructure sector and other initiatives in Budget 2021-22 were aimed at achieving the objective. However, in order for that to happen, India needs to close a huge financing gap for its small and medium-size enterprises [SMEs].

One such way to do this is to tap into the cryptocurrency market. According to Indian Software Products Industry Round Table [iSPIRT], which happens to be a ‘think tank’ for the country’s software products realm, India has key assets which will facilitate attracting global capital.

India’s Unique Opportunity To Close SME Financing Gap By Attracting New Class Investors

For instance, the country’s youth population, the growing energy of its tech industry, the swelling internet connectivity, as well as the increasing acceptance of “informational collateral” that has mostly replaced the traditional physical collateral.

However, one thing that the country’s leaders have failed to do is to integrate these assets into the new multi-trillion-dollar crypto economy, asserted in the latest report by the think tank. iSPIRT went on to speculate that the cryptocurrency market could potentially be a “risk-tolerant, internationally oriented, growth-seeking pool of investors in the world” that has remained unexplored by the country.

iSPIRT acknowledged that the new class of “wealthy, globally-minded crypto investors” could, in fact, leverage “informational collateral” to pour in capital into potentially high-risk businesses that are way outside of the tried and tested venues of America, Europe, East Asia, and the large enterprises in the country. It also stated,

“India could offer a viable path to deploy this new crypto wealth in a controlled manner while solving for SME financial inclusion. Inflows of crypto from KYC-ed investors via approved Indian, global exchanges can potentially be allowed into India for the purposes of enhancing SME access to low-cost global capital.”

The Great India Cryptocurrency Ban; Here’s All You Need To Know

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The vacuum in India’s regulatory climate with respect to the cryptocurrency industry has widened after the Supreme Court struck down RBI’s ban on the same. But the country’s plans to reportedly introduce a law to ban Bitcoin and other digital assets can have damaging consequences for the nascent crypto-ecosystem in the country.

What do we know about the Bill regarding India Cryptocurrency Ban so far?

  • Yes Blockchain Technology
  • Yes Digital Rupee
  • No ‘Private’ Cryptocurrencies

The Regulation of Official Digital Currency Bill, 2021 is likely to be introduced in the Budget Session of Parliament in India. If passed, the bill would outlaw the use of private cryptocurrency as legal tender and currency.

The agenda by the lower court read,

“To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of crytptocurrency and its uses.”

But the big question:

Can India actually ban Bitcoin?

While the latest move by the government of the country has been criticized by several players in the industry, it is, however, expected to end the years of ambiguity on the use of cryptocurrencies which is neither banned nor legalized in India and begin a much-needed dialogue between the naysayers and the proponents.

Having said that, India’s cryptocurrency ban seems highly unlikely. Here’s Why:

For one thing, Bitcoin and other major cryptocurrencies are heralded as ‘public’ and decentralized in nature and not ‘private’. Bitcoin is Not privately-owned by anyone. Hence, it remains to be seen if it comes under the purview of the bill that seeks the ban.

Secondly, there are multiple avenues of regulating than resorting to a blanket ban, something that is been vehemently pitched by the players in the crypto space.

Thirdly, an outright ban is likely to infringe the fundamental right to do business and the constitutional right to hold property, as asserted by tech lawyer Jaideep Reddy.

There is a big question mark that needs to be assessed as to how the ruling government plans to compensate the crypto-asset holders and entrepreneurs who have significant capital invested in it. Enforcing a ban would mean shutting down institutions overseeing crores of rupees of assets, cutting down tens of thousands of jobs, pushing innovation to rival countries, and not to forget, provoking a black market for Bitcoin.

Let’s talk numbers. More than 7 million crypto holders are currently present in India with over $1 billion crypto assets holdings in total. How does the state plan on disposing of the wealth?

Globally, countries such as Algeria, Ecuador, Egypt, Nepal, and Pakistan have resorted to a complete ban on cryptocurrencies. Other countries, such as Saudi Arabia and Taiwan, have taken the route of a partial ban.

It has been a year since the Supreme Court overturned the ban on cryptocurrencies. But so far, very little has been done to achieve clarity. One of the biggest hindrances was the fact crypto exchanges and groups have failed to build a strong lobby for a pro-crypto bill because direct lobbying is illegal in India.

Countries such as the US, on the other hand, saw tremendous efforts of various cryptocurrency lobbying groups leading to a positive shift in sentiment among policymakers.

India Cryptocurrency Ban Vs Regulation

Several industry players have urged for a proper regulation instead of a blanket ban on cryptocurrencies. Jaideep Reddy has called the draft bill “overbearing and arguably unconstitutional.”

However, it is still not clear if it will be the same as the draft bill proposed by the committee said Reddy. He further asserted,

“The name of the Bill is different from the draft Bill since it excludes the word ‘banning’; so there is a chance the Bill may be less extreme than the draft Bill. But based on the short description we have, there is a good chance that it will try to ban at least some trading.”

Cryptocurrency has emerged as a disruptive and lucrative space. Its underlying tech- blockchain, is in itself the future of finance. Eliminating crypto would pose a serious threat to innovation in the country that has seen a historic contraction in the wake of COVID-19 pandemic, a recovery from which would take a long, long time.

WazirX Explores DeFi Despite Regulatory Uncertainty Clouding the Indian Crypto Industry

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On 15 August, India’s leading cryptocurrency exchange, WazirX, announced that it was preparing to create and set up its first Decentralized Finance (DeFi) product in partnership with the Matic Network.The move by the exchange to create a DeFi product comes at a time when the Indian crypto industry is clouded with regulatory uncertainty. 

An automated market maker allows one to list and exchange digital assets without the need of the regular order book. Formula methods are used to establish the price of an asset, therefore, developing a liquidity pool. Meaning, the price in an automated market maker only shifts when a transaction is made hence less vulnerable to external manipulation.

WazirX DeFi testnet to be launched in September

The CEO of WazirX, Nischal Shetty, declared the DeFi product was presently being designed, and that plans were underway to launch a testnet before the end of September this year. The grounds of partnering with Matic Network was because the network offered higher scalability and output compared to Ethereum.

The final product of this new product is intended to enable users to take part in the liquidity pool in exchange for WRX tokens. Furthermore, Shetty explained that it would allow institutional assets to take advantage of DeFi liquidity to carry out trades.

To increase liquidity, Shetty explained that WazirX would team up with several liquidity providers; however, he refrained from mentioning the prospects. Besides, he stated that WazirX plans to attract current users and new institutional funds.

Indian crypto industry facing regulatory uncertainty

The new DeFi product will be launched individually from the central WazirX exchange. However, Shetty insisted that they intend to pursue a deeper consolidation between the two platforms.
Shetty noted that he was convinced that favorable cryptocurrency laws will come to India, while commenting on the regulatory uncertainty facing the Indian crypto industry .This is an opportunity for WazirX to work on a new crypto project, as it risks coming to a dead end with hardly any user, if the draconian bill proposed in 2019 is passed..

 

Indian Prime Minister Endorses Blockchain Technology Publicly as an Investment Opportunity

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The Prime Minister of India, Narendra Modi, has backed blockchain technology as an ‘opportunity in frontier technology’ reviving the desires of the crypto community for the country to be warming up for virtual assets. Like many other countries worldwide, India has seen a surge in the use of crypto assets. However, the conditions are not favorable for cryptocurrencies to thrive; the government is not supportive of crypto.

The Indian Prime Minister ‘s latest sentiments while speaking at the India Idea Summit, which was hosted by the U.S Indian business council on July 24, touched on five different technologies, including blockchain technology. The PM classified Big Data Analytics, 5 G, Quantum Computing, Internet of Things ( IoT), and Blockchain technology as frontier technologies.

Indian Prime Minister urges investors to take advantage of COVID-19

Outwardly, the Indian PM has smudged on an investment opportunity for emerging technologies and is encouraging entrepreneurs, especially from the US, to invest in them. The COVID-19 crisis has badly impacted the economy of India. In particular, the Indian Prime Minister aims to rejuvenate the economy through foreign investment collaborations from developed and promising countries, notably the United States.

The PM urged investors to take advantage of coronavirus damage in India and deploy tech-related investments that will benefit the people of India and the investors. Moreover, the Indian Prime Minister implied a long-term partnership that could flourish even post COVID-19.He noted that:

“American investors often lookout for the perfect timing to enter a sector or a country. To them, I would like to say — there has never been a better time to invest in India.”

Regulatory uncertainty still looms in the Indian cryptocurrency industry

While the future of cryptocurrencies is indistinct, the country is very supportive when it comes to blockchain technology. Skepticism about crypto is very high in India.   Even after the Reserve Bank of India removed the crypto banking ban, some Indian banks are still reluctant to offer their services to crypto-related entities.

In spite of that, the sentiments of the Indian Prime Minister have instilled faith in the cryptocurrencies community, obtaining full green light to operate in the country.