India has been one of the fastest-growing cryptocurrency trading markets. On February 2nd, 2022, the government announced that it would legalize cryptocurrency trading while simultaneously discouraging it by imposing a hefty tax.
Although Bitcoin, Ethereum, and other altcoins can be exchanged freely and anonymously, governments must regulate them to protect investors’ funds. The central bank has advocated for an official digital currency while simultaneously expressing concerns about the private cryptocurrency market. This article provides an overview of the Indian crypto sector.
Crypto Popularity
India is one of the most notable markets contributing to cryptocurrency adoption. According to Chainalysis research, the Indian market increased by 641% between July 2020 and June 2021. Central and Southern Asia as a whole was the fourth-largest cryptocurrency market investigated, with around $572.5 billion in value received throughout that period, or 14% of the global transaction value. Transfers worth more than $10 million accounted for 42% of transactions sent from India-based addresses within that period. This demonstrates that India has a more mature industry, as the country’s relatively young and tech-savvy population has accelerated the region’s growth in crypto adoption by retail investors.
Blockchain Platforms Out of India
Polygon
Polygon is an Ethereum blockchain secondary scaling solution. Polygon, originally Matic Network, is a blockchain scalability platform and framework for connecting and building Ethereum-compatible blockchain networks. Polygon’s white paper was the first to address two significant Ethereum issues: excessive gas prices and network congestion.
The Mumbai-based firm was founded in 2017 by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun.
Matic, Polygon’s native token, skyrocketed from $26 million when it was first released in 2019 to more than $14 billion in 2021.
KoineArth
KoineArth was founded in 2017 by Praphul Chandra. The company collaborates with large Indian manufacturing firms to track, trace, and authenticate the legitimacy of commodities and transactions.
Their goal is to-
- Establish transparency in multi-tier supply networks.
- Estimate the Inventory Supply and Demand
- Identify and secure capacity when demand changes.
Instadapp
InstaDApp (INST) was launched in 2019 by brothers; Sowmay Jain and Samyak Jain. It’s a decentralized application (DApp) built on Ethereum (ETH) that connects multiple decentralized finance protocols. It connects with other DApps and provides customers with a one-stop platform for managing all their funds.
Pantera Capital invested $2.4 million in the firm in October 2019. Other investors included Naval Ravikant, Balaji Srinivasan, Coinbase Ventures, IDEO Colab, Robot Ventures, and Loi Luu of Kyber Network.
EPNS
Ethereum Push Notification Service (EPNS) was founded by Harsh Rajat in January 2020. It is a Notification Protocol that allows users to receive notifications.
The service enables a decentralized wallet service to send alerts to users’ devices, informing them when the value of their NFT or cryptocurrency has changed.
BlockSurvey
BlockSurvey is a form and survey platform that focuses on privacy. It was launched in 2020. Wilson Bright and Raja Ilayaperumal started the company to allow companies and people to develop no-code web forms and surveys while collecting data anonymously.
India’s Crypto Exchanges
The top 5 crypto exchanges in India include:
CoinDCX
CoinDCX is one of India’s most popular cryptocurrency trading platforms. The Mumbai-based company announced that it had surpassed 10 million registered users on its platform, which was launched in 2018.
The exchange has a user-friendly design. On CoinDCX, investors can trade in over 100 cryptocurrencies. It only charges a small trading fee. The platform offers its customers free withdrawals and deposits.
WazirX
WazirX was acquired in 2019 by Binance; one of the largest cryptocurrency exchanges in the world. The trading platform is available on Android, iOS, Web, Mac, and Windows.
With over 6 million registered users and a transaction volume of $5.4 billion, the platform is growing exponentially.
CoinSwitch Kuber
CoinSwitch Kuber, which launched in 2017, is well-known for allowing investors to trade with as little as Rs 100. CoinSwitch Kuber enables investors to trade in over 100 cryptocurrencies. It boasts of having over 3 million users.
UnoCoin
UnoCoin was founded in 2013, long before the crypto-mania gripped the country, and is one of India’s earliest crypto trading platforms. The platform currently has over 1.5 million registered users.
Investors may use INR to buy or sell cryptocurrencies. Investors on the Unocoin platform can now use Bitcoin to recharge their phones and pay their DTH bills.
The Indian Government’s Reaction To Blockchain Technology
Government’s Reactions and Concerns
The Reserve Bank of India has consistently voiced its support for a complete crypto ban. Citing concerns about potential threats to macroeconomic and financial stability, as well as capital controls.
The government has previously stated its intention to promote the underlying technology. Industry experts, too, believe that comprehensive reforms in the bill will propel India to the forefront of blockchain technology.
The government announced that crypto-based transactions will be taxed in the same manner as gambling gains. It also formally declared that trading in cryptocurrency assets is legal.
Discussing the Crypto Bill
Finance Minister Nirmala Sitharaman declared in the Union Budget 2022, presented on February 1st, that any income from virtual or digital assets would be taxed at 30%.
This includes cryptocurrencies and other popular types of virtual assets. In addition, a 1% TDS (tax-deductible at source) will be applied to all cryptocurrency transactions. As a result, effective from April 1, India will treat cryptocurrency revenue in the same way it does lottery winnings, which are taxed at 31.2%.
Before the implementation of these new rules, the standard income tax regulations were in effect, with gains on crypto transactions classified as either ‘business income’ or ‘capital gains,’ depending on the nature of the transactions and the length of time they occurred.
Except for a few private coins to promote the underlying technology, the government intends to ban cryptocurrencies as a payment method in India.
Discussing the proposed launch of a CDBC (digital rupee) to compete as a digital currency.
Aside from that, the Cryptocurrency and Regulation of Official Digital Currency Bill declared that the Reserve Bank of India would issue an official digital currency. The Finance Minister stated that the Reserve Bank of India (RBI) would launch the digital rupee within the following year.
The digital rupee is expected to debut in early 2023. It will function similarly to any of the already available private company-operated electronic wallets, such as Paytm or MobiKwik, with the exception that it will be a sovereign-backed facility.
The Challenges ahead
For a long time, the future of the crypto ecosystem was unknown; press reports from the past two years hinted that potential legislation on digital assets was in the works.
This year’s budget indicates that the government is now more likely to focus on regulations rather than outright bans. Even with cryptocurrency regulations in place, India’s crypto-economy is just halfway there.
The Indian developer community has been noticeably absent from the discussion around cryptocurrency legislation. Instead, exchanges, ignorant investors, legacy bankers, and risk-averse government officials are deciding the fate of a technology that has the potential to be the successor to the global internet. This could be a significant cause of concern in the long run.
Can Cryptocurrency suddenly become illegal?
While the crypto ecosystem has escaped an outright ban, there is an urgent need to change the narrative about what this growing ecosystem means for India’s future technical and economic goals. As we all know, the government has consistently attempted to prevent individuals from utilizing cryptocurrencies; the only reason for the current acceptance is to “support the underlying technology.”
Conclusion
- India may be one of the most crucial regions for cryptocurrency growth.
- Many Indian firms, such as InstaDApp and Polygon, are receiving international attention from angel investors and venture capitalists.
- Finance Minister Nirmala Sitharaman announced in the Union Budget 2022 that any revenue generated by virtual or digital assets would be taxed at 30%.
- India’s Central Bank Digital Currency is scheduled to launch in early 2023.
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