Having one of the largest user-base in the crypto industry, India has emerged as a leading market for crypto products. According to a report by Triple A, there were a total of 97 million cryptocurrency holders in the year 2022 across the country, which is expected to surpass 156 million by the end of this year.
As a leader, India has always set abuzz into the crypto industry with its bold actions and anti-crypto policies. However, the Indian government is not all against crypto as it admits appreciation for this new technology and exercising on it for the advancements into the country’s growing economy.
On this 77th Independence Day of our great nation, let’s recognize India’s efforts in crypto and blockchain space. Below are some major milestones and viewpoints that could be considered as the Indian government’s significant steps in the crypto industry.
Proposal for Crypto Regulations as G20 President
As the president of G20, the group of world’s 20 largest economies, India put the need for crypto regulations at an elevated stage by pushing for globally coordinated crypto rules.
India proposed that while several intergovernmental organizations have prepared regulatory standards for crypto, there requires more coordination in order to implement regulations adopted by different jurisdictions.
In a paper released by India as ‘Presidency Note’ to G20, it has documented “a Roadmap on Establishing a Global Framework for Crypto Assets” which will be considered by the forum in adoption of crypto related regulatory framework. This document will be also further acknowledged by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) in jointly preparing for a synthesis paper.
The Indian presidency also suggested establishing a framework to provide regulators and institutions with technical guidance, assistance and monitoring.
The Launch of Digital Rupee (E-Rupee)
The Reserve Bank of India launched the Digital Rupee (e₹) in November, 2022. It is the digital version of Indian Rupee issued as Central Bank Digital Currency (CBDC) which is developed using the blockchain technology.
Amid the surging popularity in Blockchain technology, the Digital Rupee was first recommended in 2017 by the Department of Economic Affairs with suggesting to use the Distributed Ledger Technology.
The e-Rupee currently serves as legal tender and it is transferred through digital wallets which are provided by partner banks. With this move, India became one of the earliest countries to utilize and authorize blockchain-based financial applications for fiat currency.
In the financial use case, eRupee was first adopted by Reliance Retail as a payments option in partnership with ICICI Bank and Kotak Mahindra Bank.
A Whopping 30% Crypto Tax
In the Budget 2022, the government of India classified cryptocurrencies as Virtual Digital Assets (VDAs) and introduced a taxation framework for it under the Finance Act 2022. This law defined a 30% tax on cryptocurrencies selling, swapping or spending regardless of any limits on amount or term period.
In addition the new tax regime introduced 1% TDS on every transaction of the asset. This new taxation framework surely was hazardous to the Indian crypto community which received criticism not only from Indian citizens but the whole crypto industry.
This move from the Indian government has also impacted heavily on crypto trading volumes of domestic exchanges that fell more than 80% in the same year. Among crypto traders, most of them have shifted to offshore exchanges.
Cryptocurrencies & The Reserve Bank of India
Despite the tax framework and hefty clearance from the government, the Reserve Bank of India (RBI) seems uncertain in providing banking services to crypto platforms.
The RBI has always been opposed to Bitcoin and other cryptocurrencies, as such its governor Shaktikanta Das has confidently stated that cryptocurrencies will cause the next financial crisis. The governor also outlines crypto as ‘nothing but gambling’ and its value is ‘nothing but make-believe.’
Following a suggestion by the RBI, several banks have also restricted their exposure to crypto service provider platforms. The RBI governor has even sought a ban on cryptocurrencies.
However, while opposing the cryptocurrencies, RBI’s efforts are increasing in making India lead in CBDC as it recently launched plans to make its novel innovation Unified Payment Interface (UPI) operable with CBDC.
Other Use Cases
From all the major buzzing news in India’s crypto ecosystem there are few which also put the country in one of the leading nations in employing blockchain and crypto use cases in non-financial manner.
For instance, last week the Indian government unveiled a Web Browser Development Challenge with a specified feature of signing documents using crypto tokens and support for secure digital transactions.
Alongside, different state governments are also launching initiatives incorporating blockchain technology and NFT certifications.
In Uttar Pradesh, the education board has now added a course on blockchain technology, AI, and Drone Tech to help keep the students at pace with global trends.
What Is The Future Of Crypto In India?
As the crypto industry is in trend and is ever growing, the governments from all around the world would require cooperation rather than neglect or abolish its existence. Let us hope for the best and approach the crypto industry as guided by the governments and laws
With a warm heart and our auspicious love for India, we are wishing everyone a Happy Independence Day.
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