The use of cryptocurrency in India continues its struggle between the control of black market transactions and the potential that virtual currency (VC) as an economic catalyst.
The currency battle rests in the hands of several Writ Petitions submitted to the Supreme Court of India. Exchanges, investors, and promoters of cryptocurrency await a verdict that will decide whether to lift the Reserve Bank of India’s (RBI) ban on the use of VCs in the banking system, to forbid crypto completely, or to find a middle ground where regulation exists.
It has been years since bitcoin made its debut in India and when the RBI began issuing warnings in 2013 for citizens to use caution when interacting with VCs. These warnings had little effect on the mass adoption of cryptocurrency by Indians.
Just this past June, Indian exchanges had to pause registration signups due to a flood of new users entering the crypto-world. According to bitcoin trade analysts, Chris Burniske, the cryptocurrency market in India accounted for more than 10% of the international bitcoin trade volume.
This explosion of bitcoin trading only increased the government’s anxiety as it became noticeably clear that cryptocurrency was not a trend rather a growing enterprise. Concerns were legitimized by an increase in scams, ransomware attacks, and robberies that began to infiltrate the country.
Reactions to these threats led to a push for regulation that ultimately created a temporary ban on businesses tied to the central banking industry. It began in November 2017 when two public interest litigations (PIL) petitions were filed in court by Dwaipayan Bhowmick, Siddharth Dalmia, and Vijay Pal Dalmia demanding regulation of cryptocurrency in Indian. These three individuals had an interest in bitcoin investment but did not want to see their money lost through illegal means or blocked by government bans.
A public rebuttal toward the ban came through several cryptocurrency exchanges and startups claiming the ban was against India’s constitutional right of equality and right to trade. A hearing on May 11th involving four exchanges (CoinDCX, Coindelta, Koinex and Throughbit) hoped to temporally remove the ban to continue business while regulation was being decided but the hearing was postponed until May 24th.
Despite the delay, the RBI sees the potential of cryptocurrency on the economic state of India saying that:
“Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. However, Virtual Currencies (VCs), also variously referred to as crypto currencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others.”
India has one of the highest remittances in the world of about $69 billion of which is subjected to high taxes and transfer fees. Using cryptocurrency exchanges would diminish fees and make transactions quick and easy while boosting the economy.
The cryptocurrency situation in India remains at a standstill. While large conferences like the World Satoshi Summit, one of South Asia’s largest blockchain events, got canceled this month due to the regulations, online exchanges like BuyUCoin and in-person trading methods like LocalBitcoins continue to allow peer-to-peer trading, buying, and selling of cryptocurrency without the involvement of the rupee.
As the cryptocurrency market grows with or without the Indian government’s approval, it will only be a matter of time before regulations must accommodate a decentralized currency. This will ensure a developed platform to safeguard and profit from the national use of cryptocurrency in India.