Before looking at status of Crypto currency in India, let us look at global situation. The world was looking for an investment class post the global financial crisis, and Bitcoin was developed. Rest all is history. Cryptocurrency is an innovative concept of decentralized digital money. It has been turning into an interesting investment avenue in India. More often, it is compared to gold. In a developing nation like India, cryptocurrencies have great potential to maneuver the financial status of individuals and firms.
Introduction
Cryptocurrency is a topic for discussion at almost every public event. It has quickly caught the investor sentiment of the increasing value of privacy and money creation. Cryptocurrencies like Bitcoin, Ethereum, BNB, Litecoin, etc., are gaining popularity and investor interest. However, the Indian government is not yet convinced about cryptocurrency. The RBI and the government are concerned about the adverse effects of cryptocurrency and still putting their head around the support it may lend to money laundering and terrorism. These are the two biggest concerns for the Indian government.
Impact & Limitations on Crypto Currency in India
Currently, crypto currency in India do not have a legal stature. The government has not hinted towards legalizing it either. However, they are coming to terms with it by taxing it. The government has its reasons for the above, including difficulty monitoring decentralized transactions and the advantage it can render to criminal and terrorist activities.
Just like any other country, Bitcoin has become popular in India. The volume of the INR flogged in crypto currency in India has been at its highest after demonetization. As per the latest research, the Indian-rupee-generated volume of cryptocurrency is the third largest globally after the American dollar and yen. However, despite these volumes, India only contributes two per cent of the global crypto market capitalization. Here are a few limitations when it comes to the Indian market:
- Unclarity on the subject: There is a large chunk of the population that is still new to the term crypto currency in India. They still consider it to be a scam since it is unregulated. The upregulation of crypto adds to the chances of fraud and hacking. Lack of clarity on the subject is one of the biggest problems in India.
- Volatile and Risky: The crypto market is extremely volatile. With extreme volatility comes speculation and risk. Sometimes random news may result in panic selling and, thus, a market crash. However, demand and supply are the key players in the price of crypto tokens.
- KYC Rules: Cryptocurrency is a highly volatile market, and the pricing strategy depends on demand, speculations, and supply. An investor signing up for a cryptocurrency transaction must adhere to the KYC norms, which may take time for approval by the respective wallets. This puts the investor at the risk of losing a chance to make a profit as the currency value fluctuates broadly.
Present and Future of Crypto currency in India
The Central Bank of India was initially against trading of Cryptocurrencies in India. We know that cryptocurrencies still need to be regulated. But calling them illegal is wrong since the government has accepted its presence. The acknowledgement came from taxation, which is the first step towards regulating.
To learn more about the Legality of Cryptocurrency, click here.
The government is actively exploring blockchain technology to lead the digital economy. Though the government is sceptical about cryptocurrency, it is bullish about blockchain technology. However, the crypto industry believes it is as good as tracking until a decentralised system is adopted. If blockchain technology is used in a centralised system, it will provide the authority to modify and rectify the person.
Industry observers and experts hope and believe that the Indian government will begin regulating cryptocurrencies in different stages. Many private companies have started educating and exploring cryptocurrency’s advantages and investment avenues. They conduct thorough security checks and verification of documents like PAN cards, Aadhaar cards, etc.
While it is impossible to predict the future of the crypto market, the next decade looks promising for crypto investors. However, there are more questions than solutions. But, the market is pacing, interest is rising, and investors are diverting towards more intelligent and decentralised investment choices. India is on the verge of crypto market dominance.
Digital Currency in India
Over the course of the past several years, India’s payment system has seen substantial expansion, evolving into one that is both more dynamic and more advanced. This encompasses a wide range of payment operators, card businesses, and wallet companies.
It wasn’t until December 2022 that India’s Reserve Bank introduced the country’s first digital currency. It is also known as the Central Bank Digital Currency (CBDC) (Central Bank Digital Currency). Because it is digital, using it is simpler, it takes less time, and it costs less money than using physical banknotes, despite the fact that its value and acceptance are identical. In addition to this, it offers all of the advantages that come with using other digital payment systems in terms of transactions. However, it is vital to highlight that traditional forms of transactions will not be replaced by digital money; rather, the purpose of digital currency is simply to enhance and supplement traditional forms of commerce. In the same way that you may use a bank debit or credit card to complete transactions, you can also complete transactions using physical banknotes or digital rupee.
Takeaway!
Cryptocurrency is an invention that has now become a global phenomenon. Blockchain technology supporting cryptocurrency has now evolved as a modern technology tool. Earlier, the government had their inhibitions and warned the citizens from using crypto as it was associated with terrorist financing and money laundering. Despite no regulatory response from the Indian government, the number of cryptocurrency investors has increased over the past few years.
How quickly the money flows in the economy is a valid parameter of strength and dynamism. The Indian economy is sure to witness a considerable rise in the number of crypto transactions in 2023 and the years to follow, due to digital money flow.
The faster the flow of money, the better it is for India’s GDP. The effect of cryptocurrency on the Indian economy will be powered by secure, safe, convenient, and inexpensive digital forms for transactions.