Shaktikanta Das, the RBI Governor, expressed his view on the statistical numbers quoted by cryptocurrency exchanges in their ads regarding the number of Indians investing in cryptocurrency and the volumes of investment.
The cryptocurrency exchanges quoted that more than ten million Indians are participating in cryptocurrency trading and investing as of today. According to the exchanges, the recent numbers on volumes claim that crypto investments from India have marked the level of Rs. 6 trillion.
Brief History of Cryptocurrency Exchanges in India
In 2018, the Reserve Bank of India stopped all the banks and other banking institutions like NBFCs from undertaking cryptocurrency into consideration. Since these banking companies are governed by the central bank, none of the companies was allowed to facilitate crypto transactions in the country.
The restrictions lasted until 2020 when the apex court cancelled the decision made by the Reserve Bank of India to stop banking companies from carrying out activities related to cryptocurrency. After the Supreme Court lifted this restriction, it opened new doors for companies to facilitate investors with a platform to buy and sell cryptocurrencies in India.
The birth of crypto exchanges happened right after this and several exchanges were set up in India to bring brokers and investors and traders together to facilitate investing and trading of cryptocurrency in India.
RBI Governor’s Views
Since the beginning, the RBI Governor, Shaktikanta Das has maintained this concerned view regarding this investment class.
He believes that the number of Indians participating in the crypto markets is going up and the central bank has data to support the increment but the numbers quoted by exchanges in their advertisements seem largely overstated. He has a sufficient level of confidence in expressing his views.
About 3/4th of the total investors in the cryptocurrency market are small investors with investments ranging between Rs. 1,000 to Rs. 3,000 only. Perhaps the exchanges are finding it hard to get people into the crypto market and hence, they are quoting higher numbers.
As the central bank of the country, they are worried about the Indians engaging in speculative activities in the crypto market. They have suggested their views to the government and the decision from the Central Government is awaiting.
Reports are saying that the Government might be eyeing to bring out a separate bill for governing the cryptocurrency in India in the next budget session. With the increased number of participation and rising concerns, it is high time that the investors are safeguarded against any adversity around this asset class.
The Reserve Bank of India is worried about the economic distress and instability the asset could bring if there is no timely governance. The Governor’s views have always been of concern towards digital currency.
The central government is acting on the issue and is in connection with the experts from the industry to plan out the course of action that must be taken for the safeguard of investors and protect the country’s economy at the macro level.
What is cryptocurrency?
Cryptocurrency is virtual money that serves as a means of transaction between buyers and sellers for the exchange of goods and services. If you break the word down, crypto and currency are merged to form cryptocurrency. Crypto comes from the term encryption. This digital money is encrypted for security and its integrity is ensured by the blockchain system.
Is cryptocurrency legal in India?
No law stops an Indian resident from getting involved in trading or investing activities of cryptocurrency. Earlier in 2018, the central bank had restricted banking institutions from engaging in cryptocurrency-related services but later in 2020, the apex court rescinded this decision. Post that, cryptocurrency exchanges have been set up in India to allow investors and traders to explore this asset class.
Are there any cryptocurrency exchanges based in India?
Similar to stock exchanges that facilitate buying and selling of stock, crypto exchanges are set up to facilitate transactions in cryptocurrencies. Some of the leading crypto exchanges based in India are CoinCDX, Unocoin, WazirX, etc. These exchanges provide a market platform to enable trading.