As
Coinbase, the biggest exchange in the US, has a spectacular listing that valued it at $100 billion,
crypto exchanges in India await clarity over the rules amid fears that the government may ban virtual currencies.
The future for crypto trading in India is highly uncertain after the central bank and government’s expression of concern fueled speculation that an outright ban of private coins may come into force.
Indian exchanges cheer
Indian crypto exchanges are gung-ho on Coinbase listing and see boost to local exchanges.
The massive response to Coinbase IPO shows the demand for Crypto exchanges globally. This is a positive sign for Indian Crypto startups as it shows the potential for building large crypto companies in India. At WazirX our aim is to build an iconic Crypto brand from India, said Nischal Shetty, CEO, WazirX, an Indian crypto exchange.
“Coinbase’s listing on Nasdaq is the first of its kind and will mark a historic moment for the industry. It is a big step as it formalizes the process which essentially helps crypto enter the mainstream market. Any breakthrough and adaptive step towards mainstream will have a cascading effect with other players and countries adopting a similar trend,” said Sumit Gupta, Co-founder & CEO, CoinDCX.
Indian exchanges have created products keeping in mind the Indian investor sentiment, safety, and regulatory processes of the land. Bringing this technology to the mainstream is a welcome sign as this will encourage many crypto enthusiasts both within the country and abroad, he said.
“More importantly, at this juncture, this will help gauge the valuable attention of the government, central bank, other agencies. Hence we have been engaging with the government along with other stakeholders hoping to develop a more conducive and better-regulated crypto market within India. Globally too investment firms, banks, and governments are all warming up to it,” Gupta said.
The government plan
The government plans to introduce Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the current parliament session.
The bill, one of the world’s strictest policies against cryptocurrencies, would criminalise possession, issuance, mining, trading and transferring crypto-assets.
The measure is in line with a January government agenda that called for banning private virtual currencies such as bitcoin while building a framework for an official digital currency. The bill would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied.
If the ban becomes law, India would be the first major economy to make holding cryptocurrency illegal. Even China, which has banned mining and trading, does not penalise possession.
However, there are indications that India will allow it as a well-regulated asset class, rather than as a transaction mechanism keeping in mid the growing number of investors.
Business booming
However, the growing popularity of cryptocurrencies is seeing a rise in the number of crypto exchanges in the country.
Coinsbit, Europe’s largest cryptocurrency trading platform, on April 9 announced its India unit. the exchange organised what it claimed was India`s Biggest Airdrop Ever where users were awarded $200 worth of CIN Tokens for signing up and completing their KYC.
ZebPay, India’s oldest exchange for trading cryptocurrencies aims to double monthly transactions after an explosion in demand, despite
concerns of looming curbs from the nation’s authorities.
ZebPay, a platform with about 4 million customers, expects to churn $2 billion worth of trades per month, which is still less than one-fifth of trades handled by top US-based exchange Coinbase Global Inc.
“India holds less than 1% of the world’s cryptocurrencies and its potential investor base is 100 million.
In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold Rs 10000 crore in crypto-investments, according to industry estimates.
2018 experience
Even when the RBI briefly banned banks from dealing in crypto in 2018, exchanges such as Zebpay saw an increase in deposits. Even as the platform rushed to return everyone’s rupees before the banks cut their services, investors offered up more money to invest in cryptocurrencies. The banking ban on crypto didn’t cause many to give up on the asset class. Instead, he said, they simply moved to peer-to-peer (P2P) crypto platforms such as WazirX. since P2P was for a while the only way for Indians to buy or sell crypto after the banking ban, it helped WazirX grow rapidly.
Those who continue to trade in crypto either aren’t too concerned about negative regulation or may have figured out some safeguards.