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Cryptocurrency trades makes big moves in gold dominated India

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The cryptocurrency market’s popularity vector has broken all ceilings with every realm of the financial world paying close attention to its developments. Even with all the recurring price fluctuations, the industry seems to have instilled a sense of trust amongst the public especially in nascent markets such as India.

Recent reports from the subcontinent claimed that the usually gold-obsessed Indians were pouring billions of rupees into the world of digital assets. Most of the investments came from the younger age group of 18-35, a generation that was reversing the trend set by their predecessors. Indian households contain close to 25,000 tonnes, most of which are seen as generational assets. Even in this climate, the cryptocurrency market has grown in leaps and bounds with transactions accounting for over $200 million.

Many young Indians agree that they would rather put their money into crypto than a traditional asset like gold. New traders have found out that the short-term sales and big profits made digital assets a more lucrative purchase than a majority of the options available now. The privacy and transparency aspect of digital assets was another beacon for new entrants to the market. Sandeep Goenka, the founder of Zebpay added:

They find it far easier to invest in crypto than gold because the process is very simple. You go online, you can buy crypto, you don’t have to verify it, unlike gold.

Despite the industry’s success, it still had some way to go before it can overtake the gold market in the country. As of now, India’s $40 billion cryptocurrency market trails behind the Red Dragon’s $161 billion. For now, the increasing adoption is another sign of Indians’ willingness to take risk within a consumer finance sector that’s plagued with examples of regulatory short falls.

Crypto’s current stardom comes a few years after the Reserve Bank of India banned transactions in the country after calling out frauds and weak legislation. The ecosystem continued to receive pushback even after the Supreme Court quashed the ban last year and made all cryptocurrency transactions legal in the country. Investors believe that over time, digital assets will be adopted by nations worldwide.

India’s Central Bank Clarifies Circular on Cryptocurrency Ban to be Invalid

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The cryptocurrency ecosystem in India has always been a contentious one. The lack of clarity has failed to address important aspects of the users in the region. In a brief respite, however, the country’s central bank and regulatory body Reserve Bank of India [RBI] clarified on Monday that its 2018 order directing financial institutions to halt dealing in digital currencies was revoked by the Supreme Court in March 2020.

Hence, the circular in question cannot be quoted by banks to refuse services to users dealing in cryptocurrencies. The clarification came in the wake of reports that certain banks such as HDFC Bank Ltd and State Bank of India [SBI] had warned customers via emails against engaging in virtual currencies such as Bitcoin.

Shrimohan Yadav, who happens to be the Chief General Manager of RBI stated,

“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020.”

Our RBI has finally sent out this notice to banks after 15 months since the Supreme Court verdict. Never late than never and we have this as a reason to celebrate! #IndiaWantsBitcoin

A brief history into India’s relationship with crypto

It all started late 2017 after two PILs were filed in the Supreme Court of India, one that sought to ban outrightly purchasing and selling cryptocurrencies in the country, while the other urged for proper regulation. Soon after which the government had set up a committee to investigate the industry and recommend actions.

A few months later, in April 2018, RBI issued a circular restricting commercial and co-operative banks, payments banks, small finance banks, NBFCs, and payment system providers from engaging in cryptocurrencies as well offering services to all platforms which deal with them. This crippled the crypto ecosystem overnight as many trading volumes across exchanges in the country fell sharply and many lost their jobs.

In May 2018, several Indian crypto exchanges and platforms filed a writ petition in the apex court of the country.

The following year, the government-established committee presented its report, prescribing a ban on “private cryptocurrencies” in India. Despite this, the Supreme Court revoked the RBI’s circular terming it as unconstitutional.

However, in January 2021, it seems like the cryptocurrency industry in India is back to square one as the government planned to introduce a bill to not just create a digitized version of the national currency but also to ban digital currency dealings.

India’s Security Mkt Watchdog Wants IPO Promoters To Sell Crypto Holding

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India’s cryptocurrency space has been facing gloomy days and troubles are far from over. If the latest reports are to be believed, holding cryptocurrency in the country may now become a major problem for promoters looking to raise money through an initial public offering [IPO].

This comes as the latest blow to the country’s crypto ecosystem as the Securities and Exchange Board of India [Sebi] reportedly wants IPO promoters to divest themselves of any crypto holdings before their companies consider filing for public listings.

According to the report, the matter appears to originate from the possibility that the government may ban cryptocurrency that is not issued by the Reserve Bank of India [RBI].

While there is no formal written communication provided by SEBI, however, the Economic Times reported that SEBI has communicated to merchant bankers and securities lawyers involved with the IPO.

A top securities lawyer currently working on some of the largest IPOs was quoted as saying,

“There could be a direction from the government in this regard. The market regulator seems to think that this could become a risk for investors if a promoter holds an asset that is illegal in the country”

#IndiaWantsBitcoin

The country’s sizeable crypto ecosystem had previously come into the spotlight after concerns regarding the drafting of the framework of Cryptocurrency and Regulation of Official Digital Currency Bill emerged. The bill essentially plans to makes it easy for RBI to launch its own crypto and the second to ban “private cryptocurrencies”.

Hence, the campaign #IndiaWantsBitcoin rose to prominence once again.

This was followed by several platforms such as CoinDCX, WazirX, Unocoin, CoinSwitch Kuber, Zebpay, and PocketBits, to join hands to launch the online platform of the same name. The website was created to enable the citizens to show support for the cryptocurrency ecosystem to their leaders.

Commenting on the lack of regulatory clarity in the country, Sumit Gupta, who happens to be the CEO and Co-founder of CoinDCX, tweeted,

“Crypto will enable Indians to participate on the global level and build companies that can be the next Google, Facebook. Other countries are looking to tap this opportunity, India shouldn’t be left behind in this.”

Indian Crypto Industry Worried of Alleged New Crypto Ban by Authorities

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Five months ago, the Indian crypto industry was filled with hope and excitement as the Supreme Court lifted a ban on cryptocurrencies. Nevertheless, the excitement and hope were once again overshadowed by uncertainty, after an anonymous government official allegedly reported that the government is drafting a new law to ban digital currencies.

According to the alleged government official, two ministries and the Reserve Bank of India ( RBI) are proactively structuring the legal framework to outlaw cryptocurrencies for good in India. A report by the Indian news outlet, Moneycontrol, on August 4,  claimed some Indian authorities want to ban cryptocurrency trading in the country. The report suggests that the Ministry of Electronics and Information Technology, the Ministry of Law and Justice, and the Reserve Bank of India (RBI) are deliberating on the structure of the law to ban digital assets.

New crypto ban scare in India

The news outlet quotes the anonymous official, saying, “Once Parliament resumes for the session, we are hoping to get [the law] ratified.” Indian lawmakers are expected to assemble again in late August or at the beginning of September. As per the official, the government wants to outlaw cryptocurrencies through a statutory structure, as opposed to other means such as RBI’s blanket ban. He adds, “It will clearly define the illegality of the trade.”Back in 2018, the Reserve Bank of India prohibited banks from offering their services to businesses involved with cryptocurrencies. However, the crypto ban was lifted by the Supreme Court back in March. Notably, the recent revocation of the blanket ban led to the rise of many new cryptocurrency exchange platforms in the subcontinent. Indian authorities are now threatening to introduce a law banning cryptocurrencies rather than RBI’s crypto ban.

Crypto is vital to Indians during coronavirus pandemic

Cryptocurrency exchanges across India have reported substantial growth in the last few months, as investors shift away from traditional assets. Notably, many parts of India are under strict movement restrictions since the government imposed a lock-down in March.

Indian-based crypto exchange platform, WazirX, saw a massive 80 percent growth in both March and April. Furthermore, CoinDCX, which is also based in India, saw ten times more new registrations the week after the crypto ban was lifted, than the average registrations before the repeal.

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.

Indian Banks Hesitating to Embrace Crypto Industry Albeit RBI Consent

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The Reserve Bank of India (RBI) reversal of the outright crypto-currency ban in March was a gift to the flourishing Indian crypto-industry. The country’s emergence of new exchange platforms has been the incentive to the industry ‘s steady and healthy growth.

While India is one of the most affected nations by the coronavirus pandemic, this significant growth is noticeable. Indeed, the epidemic has led to a downward economic disaster across the nation. In such crisis-ridden times, blockchain and digital currencies have proved the desperately needed remedy for both investors and fintech ground-breakers alike.

Crypto regulatory wariness

Nevertheless, lifting the blanket ban seems was not the ultimate solution to the regulatory uncertainty that most had hoped to be. There have been alleged incidents where Indian banks have denied financial services to crypto-related firms. The good thing is that the industry has a more explicit regulatory structure than there was in 2017; the extent of cynicism and turmoil was sky-high.

Notably, a rumour emerged within the Indian Ministry of Finance for interdepartmental consultation on a law proposing all crypto operations to be abashed. The draft law proposal involved a heavy financial penalty for guilty individuals and a prolonged prison sentence. Recently, the rumour was refuted.

According to a business consultancy firm, AKM Global, if the proposal for a blanket ban passes into law in its current fashion, it would “completely decimate the crypto-industry in India.” Rumor has aroused the already fading fears in the crypto-currency industry in India. Regardless of the recent rumors, Nischal Shetty, CEO of WazirX, still maintains confidence with the government.

An email sent to Cointelegraph’s crypto media outlet quoted:

“On the day the news about the ‘note’ broke out, it created some panic among the community. But that’s all. We are not seeing any difference in the trading behaviour on WazirX since then. There have been speculations about crypto ban in the past as well. With more than 5 million crypto users in India, I’m confident that our Prime Minister won’t let us down.”

Indian Banks reluctance to embrace crypto industry

In addition to RBI, certain private commercial banks in India have refused to process cryptocurrency transactions. However, a large percentage of speculations suggest the reason why the cryptocurrency sector lacks knowledge; as noted within various government bodies.

Siddharth Sogani, the founder of Crebaco research firm, believes that there may be further conflicting interests at play. According to him, “Banks will always be globally opposed to this industry because if crypto comes into action; P2P transactions will eliminate the need for third-party bankers.”

Regardless, in response to a request for information from the co-founder of the crypto exchange Unocoin, Harish BV, the RBI did not, in fact, indicate any limitations on banks offering crypto-related companies and individual traders to account. This was the major RBI statement that presumably banks were waiting for, but the actual quantifiable effects remain.

Binance Becomes the Latest Member of the Indian Internet Association

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The top cryptocurrency trading and exchange platform, Binance, has become the newest member of the Indian Cryptocurrency Exchange Committee of the Internet and Mobile Association (IAMAI). Although uncertainty is looming over the Indian cryptocurrency sector, leading cryptocurrency exchanges have joined the nation’s top Internet association.

The association is the leading trading body that speaks on behalf of Indian crypto firms. In particular, the association was a key advocate of petitioning Indian legislators to Reserve Bank of India to the previous banking bank. The Supreme Court of India overturned the rule at the beginning of 2020.

Binance expanding its operations to India’s budding industry

Binance’s membership comes at a crucial time when the Indian Ministry of Finance progresses with its proposal to permanently ban digital currencies in the country, about seven days ago. 

The top exchange on platform announced its IAMAI membership on June 18, stating that it will work to carry out the best international enactments to trigger the growth of the Indian cryptocurrency industry. According to the founder of Binance, Changpeng ‘CZ’ Zhao:

“Binance is honored and excited to join IAMAI and contribute our part in shaping the Indian blockchain industry for sustainable growth and development.”

 

India’s cryptocurrency industry facing uncertainty

Following the partnership, Binance will roll out a ‘Blockchain for India Fund’ to finance development and innovation in India’s blockchain sector. Binance will work together with the Indian authorities and regulators to advise on the best regulatory structure of cryptocurrencies in India. 

Although the ban on providing banking services to crypto-related firms was lifted in March, India’s blossoming crypto industry is still under threat. For instance, banks in India continue to marginalize crypto-related activities and unclear taxation structure of crypto assets. Notably, the most significant danger is presented by the latest proposal to impose a blanket ban on India’s digital currencies. 

Ripple offers Recommendations to Indian Legislators on Transparent Crypto Regulatory Frameworks

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Ripple ‘s new white paper offers a crypto-regulatory frameworks to the Indian legislature in response to the Supreme Court’s decision on cryptocurrencies. The Indian crypto sector is currently clouded with precariousness; despite the country ‘s apex court’s reversal of the previous Indian Reserve Bank ban.

The Supreme Court’s lifting of the ban on banking services did not provide a legal policy for legitimizing the country’s digital currencies. Nevertheless, the cross-border settlement network, Ripple, has published a white paper summarizing the recommended legal structure for cryptocurrencies in the country.

 

Ripple’s crypto regulatory recommendations to India

According to regulatory head for Ripple in Asia, Sagar Sarbhai noted that:

“India is currently presented with an opportunity to develop a regulatory framework for a native digital assets ecosystem. We are optimistic about that after a careful deliberation and consultation with industry participants.” 

According to him, the new Indian digital asset legal policy should be technologically cynical, principle-based, and risk-adjusted to provide clarity on the legal structure that can guide, maintain, and mitigate any related risks.

The Crypto Regulatory Recommendations provided by Ripple would sort out the cloud of uncertainty surrounding the Indian cryptocurrency industry. Although the Supreme Court lifted India’s RBI crypto ban on legal grounds that the administration could not suppress commodities that individuals choose to hold, it did not provide a clear legal guideline for digital currencies.

India Awaiting Legal Clarity

To fulfill the legal desires, Ripple’s crypto regulatory recommendations propose a digital asset taxonomy in line with international guidelines, and an adjustment on the central bank’s Regulatory Sandbox Framework to exclude “cryptocurrency” and “cryptoasset services” from the negative records.

Indian lawmakers will head back to parliament in July, with cryptocurrency legal concerns in mind. Despite the uncertainty, Ripple is still optimistic that India will reap the economic benefits of shrewd regulation and create a structure that encourages development and growth.

The Indian Cryptocurrency Saga: From Bans to Massive Investments and Everything In Between

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India has always been an epicenter of growth and development, with a large demographic that plays a key role in creating markets. The population of the country has also been a major pull for cryptocurrency companies that have understood the impact it could have on mainstream adoption. All this conceptualisation came to a grinding halt in April 2018 when all forms of cryptocurrency transactions were banned by the country’s primary bank.

The Supreme Court of India finally lifted the ban in March 2020 after months of trials and legal battles by crypto-currency evangelists. This decision has brought in a wave of new investments and the South Asian subcontinent looks bright for the future. Let’s look now at how India’s virtual asset industry has changed and where it can go from that point forward.

Since Bitcoin ‘s inception, world governments have been scrambling to ensure that regulatory clarity in terms of the cryptocurrency industry is maintained. India has also been caught in the mix, debating the industry and how it can be managed.

2018 and the RBI ban

India had a functioning and thriving community of crypto-currency prior to the ban. Several crypto-currency exchanges and companies played a prominent role in creating the ecosystem of digital assets in India. Once the RBI made it illegal for cryptocurrencies to act as legal tender, major players like Zebpay and Coinex almost instantly had to shut down shop. Some organizations have decided to leave the country and take their business to another location. Analysts noted that despite the ban, there were still several citizens trading in crypto although using foreign exchanges.

The Supreme Court- Crypto’s Messiah

The cryptocurrency ban revealed one thing about the Indian masses-the would not take anything sitting down. Once the ban was in place, several cryptocurrency supporters and evangelists made it a point to move the country’s highest court for a fair trial. Non-profit groups and associations hired their own legal teams to make crypto’s case which finally came to fruition in March.

According to the Supreme Court’s latest decision, cryptocurrencies were no longer an illegal tender in India. This also meant that traders could finally make INR to crypto transactions without having to worry about conversions rates related to stablecoins or foreign currencies.

The Indin Cryptocurrency Scene Now

All doubts about the effectiveness of the court’s decision were removed when Indian traders jumped into the fray once more wholeheartedly. Reports showed that in the month of March alone, the Nischal Shetty founded Wazir X saw a whopping 400 per cent rise in trading volume. The exchange witnessed a 270 per cent spike the following month, unheard of consecutive figures in the Indian cryptocurrency community.

India’s potential was also recognized by the Chnaghpeng Zhao led Binance, which initiated a $50 million fund to promote blockchain technology in India. This was done in partnership with WazirX with a promise to build a more sustainable digital asset ecosystem in the country. Shetty, who is also the chief executive of WazirX had said:

“They [investors] have realized that a lot of startups are mushrooming and they want to be the early movers,” he said. “In the US, there are huge investments taking place (in crypto startups) since 2010, which will also happen in India.”

What does the future hold?

There is no doubt that, now that the ban is lifted, more and more investors will continue to make inroads into the country. Popular organizations such as BeFaster and CoinSwitch recognize that the wide scale scope offered by the population of the country is incomparable to the rest of the world.

If proper steps are taken, the companies mentioned above will have access to millions of traders most of whom are under the age of 30. Blockchain-based applications such as BeFaster will be attractive to the younger generations due to their focus on fitness and health. Customers of the application will also be able to earn tokens according to how they use it. BeFaster’s Co-Founders and CEOs, Irina Manilitsch told TWJ that:

“The fact that the government of India is opening up to cryptocurrencies right now is a great opportunity for investors and the population. The people of India will now also have the opportunity to generate additional income just by moving. Investors, on the other hand, now have the chance to invest in the future and a booming market.”

The path toward mainstream acceptance, however, is not all rosy. Reports have said some crypto companies still find it hard to operate in India because some banks refuse to deal with them. For their part, the banks have referred to the criminal activities that are being conducted using crypto as the key deterrent. If the crypto-currency industry needs to take off in India, exchanges and companies are responsible for providing a safe and legal environment for virtual asset trading.

 

 

 

RBI Calls Out all Banks Who Refuse to Provide Accounts to Crypto Organizations, Claims There Are No More Bans

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The Indian market has always been seen as an enemy of the cryptocurrency industry, with Reserve Bank of India  (RBI) acting as an antagonist. Indian cryptocurrency supporters were recently won by the Supreme Court’s decision to lift the 2018 crypto ban.

Despite the change, there have been some industry complaints about mainstream banks preferring traditional set-ups rather than emerging virtual asset companies. In order to combat this difference of opinion, Unocoin, co-founder of BV Harish, took matters into his own hands.

Just recently, Harish filed a  Right to Information [RTI] with the Supreme Court to inquire whether provisions were in place to address the bias shown by the institutions. The Reserve Bank has expressly stated that the new legislation applies equally to all bodies, regardless of their affiliation with the financial department. The RTI premise was based on a report that banks were not issuing accounts to cryptocurrency traders.

The RBI took almost a month to respond to the initial RTI that was much talked about in the cryptocurrency world. According to the central bank, there were no prohibitions or restrictions that would set aside any individual or organization working in the digital asset world. The main reason for the bank’s reply was the sheer number of complaints from the Crypto Department. Speaking on the RBI’s latest revelation, Harish said:

“ Bankers have been saying that they need new RBI circulars mentioning that there are no more restrictions for them to provide bank accounts for crypto businesses. Now, we have received a positive response from the RBI. ”

The RBI was just one of the bodies that responded to the requests, while several major players remained silent on the issue. Banking giants such as SBI, HDFC, and Axis Bank have yet to comment on the plight of cryptocurrency officials. Despite the backlash from the mainstream community, enthusiasts like Harish are out to prove how crypto can benefit people.

Ever since the original ban on crypto was lifted in March, the people involved in the sphere predicted that the ride would not be as peachy as it seems. It makes sense why the banks did not pay any attention to crypto: restricted mindset.   Many supporters believe that if major organizations could overcome the mental hurdle, a lot of pieces would start to fall into place.