India, Vietnam and Pakistan are all helping to lead the expansion of crypto markets in central and southern Asia. India’s market grew by over 641% this past year and Pakistan’s grew by 711%. India also has a 59% share of activity taking place on decentralised finance (DeFi) platforms, with Pakistan holding a 33% share.
There has been a significant increase in cryptocurrency-related entrepreneurship in the region in 2021. A report by Chainalysis said, “Large institutional-sized transfers above $10 million worth of cryptocurrency represent 42% of transactions sent from India-based addresses, versus 28% for Pakistan and 29% for Vietnam.” Adding, “Those numbers suggest that India’s cryptocurrency investors are part of larger, more sophisticated organizations.”
2021 has seen a number of twists and turns for India’s cryptocurrency market. There have been reports on the regulatory front that the country may try to ban or restrict crypto. However, more recently it appears that the Indian government may opt for taxation instead.
Crypto law in India
In April 2021, a review from The Legal 500, outlining the legality of cryptocurrency in India, revealed that the Indian Government is considering the introduction of a new bill “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.”
The new bill intends to ban cryptocurrencies in India, with certain exceptions to promote the underlying technology and trading of cryptocurrency. The exceptions will also provide a framework for creating an official digital currency, which will be issued by the RBI.
The proposed bill also recognised the grey area of cryptocurrency laws. In April, the RBI cautioned the general public about the possible misuse of private cryptocurrencies. However, many fear that a complete ban of cryptocurrencies in India could lead to investors dealing in unmonitored markets.
Even with the introduction of a state-owned cryptocurrency, the risks will remain the same. It is thought that around 1.5 million Indian citizens have invested in cryptocurrencies. With such a large number of people investing in the currency, it is unlikely that the Indian Government will completely ban cryptocurrencies.
With China currently tightening its grip on crypto, will India be the next country to follow in its footsteps?
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