Will the new “Crypto Bill” hamper India’s growth in the Crypto space?
India’s growth in the crypto space in the year 2021 has been nothing short of remarkable with the space growing close to 641% year on year. This growth was not only powered by millennials but it has also put India on the record with the most cryptocurrency holders in the world at 100 million people. Despite all these achievements, the regulations in India have not been clear along the way in defining the government position with the space including the new “Official Digital Currency Bill” set to take effect in late 2021 or early 2022. What is this new bill that is aimed to take place in India? How will this affect the growing Indian crypto community?
What is the new “Official Digital Currency Bill” and the crypto regulations in India?
The “Official Digital Currency Bill” is a bill that has been passed to the parliament to be discussed further in the winter of 2021 and set to take immediate effect. The Crypto industry is awaiting this as a positive regulation that may permit investing and trading in crypto with certain restrictions. The buzz around the Crypto Bill till now has been mixed with both positive and negative comments.
The Crypto Bill is one of the many items on the list of bills set to be introduced in Parliament during the Winter Session. Although we do not have clarity on this bill until it comes to public domain, confusion and panic has been created in the crypto market due to the wordings used in it. One thing that is clear from this bill is that Cryptocurrency will never be considered as a legal tender and instead will be considered as assets. This will then bring ways to the introduction of digital state backed currency which has been planned to be introduced for sometime now.
Although one of the highlights of the Crypto Bill was that the government will be looking to ban private cryptocurrencies with some exceptions to promote the underlying technology and its uses according to sources. A point worth to be noted is that at this moment, the government has not clearly defined what it means by private cryptocurrencies and also a lot of this ‘regulation’ is still in a speculative stage. As per reports, it is believed that Bitcoin, Ethereum and other digital coins that operate via blockchain network will not be banned as their transactions could be easily traceable within the network.
On the other hand, crypto assets like Monero, Dash and Zcash may likely be banned because they allow their users to operate anonymously to make transactions within the network. Although you can remain anonymous in other networks as well, in Monero they allow the user’s data to be encrypted and transactions are untraceable.
The only catch here is what if the government classifies the cryptocurrencies on the basis of their ownership. In that case, all the cryptocurrencies not issued by the government will be recognised as private cryptocurrencies. This means Bitcoin, Ethereum and other cryptocurrencies may also face a ban.
What the investors need to understand for now is that this is just a proposal though. The bill will be up for discussion after it is introduced in the Parliament and the final draft can be completely different. Don’t be surprised if the current draft is entirely scrapped and a new one is drafted. But right now it is a clear good intention that at least the 2nd most populated country in the world is not looking to ban crypto and instead wants to regulate it.
How will this affect the growing Indian crypto community?
The Crypto space in India is too big to deny with more than 100 million users and nearly one in six urban Indians invest in virtual tokens. Not only this but there has been a spurt in the popularity of crypto exchanges and platforms in recent months with some of them achieving unicorn status like CoinSwitch Kuber, Wazir X, Coin DCX, Zebpay, Unocoin and BuyUCoin. Crypto exchange Zerodha has about 7 million users, against 11 million users at CoinSwitch Kuber and 8.3 million at Waxir X.
The Crypto space has huge potential to grow in India considering the amount of population the country has and India being the country that is well adapted to technology. The government could be opting for a conservative approach by banning them just like China or it could also regulate them just like most countries and let this space grow to its potential. Of course being a legal tender just like El Salvador did is a tall order but this bill should be able to strike the balance of security while maintaining its potential to prosper.
“We are awaiting further details on the Bill… There have been many positive steps taken by the government to learn and understand crypto and its impact on all stakeholders — investors, exchanges, policymakers. So, we are looking forward to a crypto Bill that takes into consideration all the inputs from those discussions,” says Avinash Shekhar, co-CEO of cryptocurrency exchange ZebPay.
Well the stakeholders in the crypto space are clearly excited and unclear of how this bill will take shape so there is still a sense of nervousness for investors in the market. Shortly after the announcement that this bill was going to be discussed in the winter session, the market crashed by 15% including major coins like Bitcoin and Etherum.
While we still have to wait for this Cryptocurrency Bill to be released, it is still a good sign for India to become the leader in the crypto space. Without the regulations in the market, India has already cemented its interest on the Crypto Space with the most number of users and this will only continue once people know the government regulations are in place. There could be big things coming from the land of spices.
We in Nagaya Technologies Pte. Ltd believe that proper regulations that are designed both by its stakeholders and regulators could result in a win — win for all and propel this industry toward its maximum potential. Which is why we created the world’s first hybrid cryptocurrency called Nagaya that is well-equipped with legality and transparency to provide the maximum value to all of you, our Holders. For more information regarding the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial