Why cryptocurrency is booming in India despite national ban fears

Why cryptocurrency is booming in India despite national ban fears

In recent months, there has been intense speculation in India about the future legal status of bitcoin (BTC) and other cryptocurrencies.

Speculation increased in February when an unnamed Indian minister told Bloomberg that a national ban on cryptocurrencies was imminent and that holders would be given several months to dispose of their coins and tokens.

Fears were then somewhat allayed when Finance Minister Nirmala Sitharaman told CNBC that reports of a complete ban on cryptocurrencies were exaggerated, adding that an upcoming decision would have a much more calibrated approach.

It was perhaps this promise of calibration that triggered a massive surge in listings on one of India’s largest cryptocurrency exchanges, WazirX, in the first week of April. Priyanka Sharma, head of communications at WazirX, told Cointelegraph that WazirX had more subscribers in the first six days of April 2021 than in the entire first six months of last year.

India’s other cryptocurrency exchange, CoinDCX, registered twice as much in the first quarter of 2021 as it did in the final months of 2020, the company’s senior communications manager, Aheli Raychaudhuri, told The Guardian.

The pessimism resulting from real fears of a national ban on crypto-currencies seems to be offset by optimism resulting from developments elsewhere in the world.

The widespread adoption of bitcoin and other cryptocurrencies by major companies like PayPal, Tesla and Microstrategy has not gone unnoticed in India, said Sharma, who also pointed to the role that the COVID-19 blockade has played in the renewed interest in cryptocurrencies:

This growth spurt is the culmination of the last 12 months of positive movement in the Indian crypto economy. From the Indian Supreme Court’s lifting of the ban on banks to the blockchain pandemic, it has made more people aware of crypto. Positive global news followed on Tesla, Microstrategy, Square, Pipal and Visa’s entry into cryptocurrencies.

Publicly available plugin data shows that visits to the WazirX website have increased by 630% in the last six months, from around 500,000 to over 4 million monthly visitors. According to Sharma, the fastest influx of new signups comes from users in their 20s and 30s, and he added that people are confident that regulators will show leniency when cryptocurrency laws are finally passed.

A similar trend can be seen at CoinDCX, where the number of visitors has more than tripled since November 2020. Most of the new enrolments are also in the 18-34 age group, Raichaudhuri said.

With the authorities yet to come up with a smoking gun, Mr Sharma believes that the fear, uncertainty and doubt caused by the leaked ministerial letters in February have almost been dispelled:

Finally, the crypto currency law has not yet been implemented. Thus, the FUDs generated in February and March 2021 were overwritten accordingly. The fact that our finance minister has said that India is not banning cryptocurrencies and is taking a calibrated approach to the sector is also helpful.

Indian cryptocurrency exchanges are not the only ones thinking in this direction. Leading US cryptocurrency exchange Coinbase recently launched a recruitment campaign in India to locate part of its IT and engineering departments in the country.

Raichaudhuri said the demand for cryptocurrencies in India has increased throughout the year, especially after the Indian Supreme Court’s decision to lift the ban on cryptocurrencies imposed on banking institutions by the Reserve Bank of India.

Currently, there are over 750,000 investors in India and over 340+ crypto startups as of March 2020. Moreover, the volume of transactions has increased by more than 500% after March 2020, Raichaudhuri said.

WazirX CEO Nischal Shetty recently teamed up with other industry leaders to create a set of speculative rules that they hope lawmakers will consider.

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