March 2020, things have taken a positive turn and cryptocurrency is declared completely legal in India. Find out the complete story here!
The ray of hope that the entire crypto-community had been waiting for finally made its way through. After nearly two years of a blanket ban on cryptocurrency trading in India, the Supreme Court of India made a ground-breaking decision. On 4th March 2020, it lifted this ban and removed all the restrictions for trading cryptocurrencies in India. As of March 2020, cryptocurrency is legal in India.
What does this mean for the crypto community and to the crypto industry market of India in general? Well, let’s find out!
Cryptocurrency Trading Market in India
Before RBI restricted activities around bitcoin and other cryptocurrencies, India had a massive pool of avid investors. Take a look at these key statistics that give an insight into how huge the crypto market in India is!
Prior to the cryptocurrency ban, the Indian crypto market stood at $12.9 billion, back in 2016-17. Amidst demonetization, popular exchanges like Zebpay registered 300,000 to 400,000 new users each month while Unocoin had a user base close to 10 million. In fact, at its peak, prior to the cryptocurrency ban, India had a volume of $50 to $60 million per day in cryptocurrency trading.
All trading activities came to a halt when the RBI decided to put a blanket ban on cryptocurrency trading. With a lack of appropriate powers, it could not outrightly put a complete ban on trading activities. Hence, in 2018, it imposed restrictions by banning financial institutions with any dealings with cryptocurrencies. In other words, a cryptocurrency exchange user cannot convert crypto to fiat and further deposit to their bank account.
Is Bitcoin Legal in India in 2020?
After the RBI imposed a partial ban on cryptocurrencies, a number of hearings have been scheduled in the past 2 years. The efforts finally paid off when the Supreme court removed the ban and declared trading for bitcoin and other cryptocurrencies legal in India.
The Supreme court stated that RBI had failed to show subsequent data that proved that virtual currencies were a harm to the Indian banking sector. The validation for the ban was insufficient and baseless.
Nischal Shetty, CEO of WazirX, who had also been leading the battle at its forefront stated ” Today’s a historic day for the entire Indian crypto ecosystem. This positive judgement will open doors to massive crypto adoption in India. It proves that we can now innovate, and the entire country can participate in the blockchain revolution.“
What Does This Mean For Crypto/Blockchain?
After the partial ban, a number of cryptocurrency exchanges closed their shops and moved on to different locations. But now that it is legalized, we will see the old ones and even a couple of new ones opening their markets in India. The primary reason for this factor is the country already has a huge user-base and investors interested in pooling their money into cryptocurrencies.
Furthermore, in the next couple of months, India will also witness a sprint in service providers pertaining to crypto and banking services. This would also give a boost to crypto adoption in the country.
Another significant advantage of this move is that blockchain technology can function without any limitations. It is true that blockchain applications do not necessarily involve cryptocurrencies or tokens. However, some blockchain networks do require tokens to support their activities and functions to optimum capacity. India has always been a huge proponent of blockchain with state governments openly developing solutions that are based on blockchain. Removal of the ban would further ensure operating any blockchain network to its full potential.
However, having said that, India yet lacks a regulatory structure as far as cryptocurrencies are concerned. The next big milestone for Indian crypto industry is a legal framework that gives investors a clear idea on tax implications for cryptocurrencies. It is expected that RBI is likely to release a structured framework soon.
In the last year alone, a number of countries have legalized cryptocurrencies or their aspects around it. While Germany declared bitcoin as a legal tender, France gave green signal to ICO’s.
It is undeniable that cryptocurrency adoption across the globe is rising. Moreover, governments have started recognizing their valuable contribution to the banking and finance sector. By lifting this ban, India now stands in par with these countries allowing innovation at its best. What remains to be seen is when and how the country develops a regulatory governing structure around it.
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Meanwhile, amidst this pandemic, we wish everyone their safety. Stay at your homes. Wash your hands. Practice social distancing.