Everyone is curious to know about cryptocurrency in India. Along with the world, India too could not remain untouched by cryptocurrency. The financial ecosystem around the world is gradually changing due to cryptocurrency.
In this blog we will know what is cryptocurrency and try to know about the future of cryptocurrency in India, which will give you an opportunity to learn about cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a type of digital currency based on cryptographic techniques that is considered safe for transactions. Cryptocurrency works on a network of blockchain technology which is completely different from the currencies issued by the governments of each country.
Cryptocurrency is used for transactions and investments which eliminates the need for banks, which has both advantages and disadvantages of using it. Some of the popular cryptocurrencies are – Bitcoin, Ethereum, Binance Coin, Doge Coin, Ripple, Shiba Inu etc.
The Current Legal Status of Cryptocurrency in India
Till now, cryptocurrency is neither considered completely illegal nor legal in India, but the Government of India and the Reserve Bank of India have been issuing guidelines from time to time. Like-
2018 Ban by RBI – RBI had banned all services related to cryptocurrency in 2018, due to which crypto exchanges had to face a lot of difficulties.
Supreme Court decision in 2020: The Supreme Court of India overturned this decision of RBI in 2020 and after that the services of crypto exchanges resumed.
Taxation in 2022 – Recently the Government of India has implemented the provision of tax on income from cryptocurrency transactions, making 30% on cryptocurrency and 1% TDS mandatory on all crypto trades, which was described as a positive attitude of the Government of India towards cryptocurrency.
Exchange Regulation: Crypto exchanges operating in India are said to strictly adhere to Know Your Customer (KYC) norms. Some of the popular exchanges operating in India include CoinSwitch Kuber, Delta Exchange India.
The Government of India is working on the “Cryptocurrency and Official Digital Currency Regulation Bill” in which clear rules will be made regarding cryptocurrency.
Trends Shaping Cryptocurrency in India
Increasing adoption of blockchain technology: Cryptocurrencies are being adopted in various sectors such as finance, supply chain management, healthcare and real estate, which is also being called a positive move.
Rise of the digital rupee: Meanwhile, the Reserve Bank of India (RBI) has also launched its Central Bank Digital Currency (CBDC), which is being called India’s digital rupee. Although it is not a cryptocurrency, its launch is being seen as the Indian government giving approval to cryptocurrencies.
Growing investor interest: People in India are increasingly investing in cryptocurrencies, especially India’s young population and platforms like CoinSwitch Kuber and Delta Exchange India have made it easier.
Growing global influence: The influence of Western countries on cryptocurrencies is increasing, which is indirectly pressuring India to make regulations as well.
Educational campaigns and awareness programs: The government is also aware and is running awareness campaigns from time to time about the risks of cryptocurrency investments and cautioning its citizens.
Challenges Facing Cryptocurrency in India
Regulatory uncertainty: Currently, India lacks a strong framework for cryptocurrencies and there are no proper rules and regulations, which creates uncertainty for investors and businesses.
High taxation: The high taxes imposed on cryptocurrency in India affect investors, due to which investors go to foreign markets or unregulated platforms for investment.
Lack of awareness and trust: Even after cryptocurrency has become popular in India, citizens do not know its uses, which increases the risk of scams and frauds.
Volatility of cryptocurrencies: Investing in cryptocurrencies has proven to be risky due to extreme fluctuations in value, so the government is also cautious.
Governmental skepticism: The Indian government views cryptocurrencies with suspicion as incidents of money laundering and terrorist financing have been reported from cryptocurrencies in recent years.
Opportunities for Growth
But despite the challenges, the future of cryptocurrency in India is full of immense potential:
Regulatory Clarity: If the Indian government issues clear and balanced guidelines on the legality of cryptocurrencies, cryptocurrencies in India will get a boost which can attract Indian fintech startup investments.
Mainstream Adoption: Over time, as the Indian industry adopts blockchain technology, the use of cryptocurrencies is likely to increase.
Global Collaboration: India can establish itself as a crypto-friendly nation by collaborating with global crypto platforms and raising its voice for equal regulation at the international level.
What Lies Ahead?
The future of cryptocurrency in India can be bright only when the rules and laws are strict and a balance is made between regulation and innovation.
There is a need to create a framework in India that encourages all citizens to develop and adopt cryptocurrency.
It is important to first understand the risks and opportunities of cryptocurrency investment and most importantly be aware and cautious so that one does not fall prey to fraud.
Conclusion
At present, the journey of cryptocurrency in India is at a crossroads and the way ahead is full of difficulties. Now it depends on the government what kind of guidelines it issues so that India can also establish itself as a leader in the digital economy at the global level.
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