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Blockchain & Crypto Year in Review - India

India has become one of the most important regions for cryptocurrency and blockchain technology due to the sheer number of users indulging in the markets.

Unprecedented Growth in 2021

2021 has been one of the most exciting years for the cryptocurrency markets worldwide. Amidst the global pandemic and the economic slowdown, cryptocurrencies have become lucrative investments for investors worldwide, including countries like India, a country that has over 400 million investors indulging in the financial markets.

Due to the massive crypto bull run that started in late 2020, there have been many Indian investors turning to cryptocurrencies to add digital assets to their portfolios. This led to the cryptocurrency investors rising from $923 million in April 2020 to almost $6.6 billion by May 2021, marking a 400% increase in a year. As previously reported by Bsc.News, India leads the world in terms of cryptocurrency users, with over 100 million cryptocurrency investors in the country, according to a report from TripleA.

“The young demographic in India give an edge to adapt and build on new financial technologies, and I believe this will play a vital role in making India a global blockchain innovation center to also spur cryptocurrency adoption throughout the larger public in the country. The acquisition of WazirX shows our commitment and dedication to the Indian people and strengthen the blockchain ecosystem in India as well as another step forward in achieving the freedom of money,” stated CZ (Changpeng Zhao), the CEO of Binance, post the acquisition of Indian cryptocurrency exchange, WazirX.
Source: TripleA Report

A report from WazirX revealed that the exchange clocked a trading volume of over $43 billion in 2021, which is a cool 1,735% more than the trading volumes in 2020. Nasscom further revealed in a report that from here on out, the cryptocurrency market in India is expected to grow at double the current rate and has the potential to create 800,000 new jobs in the country by 2030.

Regulatory Clarity Awaited

Despite the massive growth, the financial regulators in India haven’t issued much clarity on the regulations around digital assets in the country. Previously in 2018, the Indian regulators placed an outright ban on cryptocurrencies and their services. However, this ban was overturned by the Supreme Court of India in March 2020, after which investors were free to invest in digital assets and services providers like crypto exchanges to resume their services to the public. 

It took until May 2021, after the Supreme Court quashed the ban in March 2020, for the Reserve Bank of India (RBI) to confirm that the law that enforced the ban is no longer effective and should not be cited, as previously reported by Bsc.News. The RBI needed to make this confirmation in response to the Twitter buzz created by HDFC Bank user Sanath Mehrotra when the bank cited the outdated RBI guidelines threatening to stop his banking services.

Since then, there have been no other laws passed in relation to digital assets and blockchain technology passed by the regulators. However, there have been several discussions regarding the ban on “private cryptocurrencies” and the RBI launching their own CBDC. The cryptocurrency bill was even put on the agenda for the parliament for discussion in the Winter session held in December 2021. The session has since come to a close, but there was no mention of the bill.

The bill is a part of the agenda in the Parliament itself scared several investors in the country. After it was initially revealed that the bill would be discussed in the Winter session, fear gripped the Indian crypto market, and native exchanges saw the prices of flagship cryptocurrencies like Bitcoin and Ethereum crash between 10-15% the very next morning, providing a good arbitrage opportunity for hodlers in the country. Since then, there has been no word from financial regulators on their intentions to ban cryptocurrency.

Most recently, as previously reported by Bsc.News, the Binance owned exchange based in India, WazirX, was fined nearly $6 million by the Mumbai GST Commissionerate for alleged GST tax evasion. The official statement revealed that the agency recovered $6.6 million from the exchange, including interest and penalty charges.

However, WazirX has cited the lack of regulatory clarity from the financial regulators mentioning, “an ambiguity in the interpretation of one of the components, which led to a different calculation of GST paid.”

But the Mumbai-based tax agency's statement revealing their intention to continue their crackdown and expand it to the other cryptocurrency exchanges based in the region could bring further trouble for these exchanges in the near future.

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