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India Plans to Curb Crypto Trading With New Law

India Plans to Curb Crypto Trading With New Law

India, Asia’s third-largest economy, is reportedly on its way to stop all crypto trading once again in the country, after a long tug-of-war of crypto legislation.

A new bill will be discussed shortly by the Union Cabinet before it makes its way to the Parliament. The bill comes at the same time when several national governments like Korea, Singapore, and Switzerland, among others, plan to regulate cryptocurrency trading.

Indian Government Flip-Flops on Crypto

India experienced a rise in crypto trading after passing the 2016 demonetization program under the Modi government. However, the crypto trading ended in 2018 when the Reserve Bank slapped a ban.

After a long legal battle, the country’s apex court ruled in favor of the crypto exchanges and lifted the ban in March 2020.

The win in court stimulated an almost 450% surge in trading in just two months. The search interest for the term cryptocurrency in India spiked sharply in the same month and has been on a steady uptrend ever since.

Cryptocurrency Search Interest in India (Source: Google Trends)
Cryptocurrency Search Interest in India (Source: Google Trends)

India’s New Crypto Trading Ban

The Indian central government is averse to the idea of cryptocurrencies, but it remains keen on blockchain development. The renewed trading ban was planned due to a lack of regulatory measures needed to avoid strings of fraudulent actions.

However, the ban may affect more than 1.7 million Indian traders and a huge number of companies setting up platforms for the trade. Khaitan & Co Partner and New Delhi-based lawyer Sanjay Khan advises that instead of a ban, a regulatory framework can be made.

Sanjay said,

To ensure adequate oversight of the government and the RBI over cryptocurrency businesses…India can actually benefit from such a regulation to attract cryptocurrency investors and businesses

At the moment, India is yet to unveil its conceptual research with digital currency. Other economic monsters like China have already raced to this opportunity. Moving from its research stage, China has already designed the concept for Digital Yuan and started the experimental phase.

India Expands Crypto Infrastructure

Over the past six months of 2020, Indian investors have been largely moving towards the crypto market. Moreover, the Coronavirus economic crisis and unemployment have fueled investors’ inflow in crypto.

In fact, Hashcash Consultants planned to invest $10 million into the Indian crypto industry. The said company has a presence in 26 countries and more than 100 enterprises use its products.

WazirX, a Mumbai-based crypto exchange, also grew rapidly as it recorded a 400% increase in trading volume in March. In addition, Binance has acquired the exchange at this time, signaling a strategic move to drive crypto adoption further in India.

According to Coingecko, the exchange supports 73 cryptocurrencies and 155 trading pairs, with a 24-hour trading volume of $8.5 million, at the time of writing.

WazirX Trading Volume 1-Year (Source: Coingecko)
WazirX Trading Volume 1-Year (Source: Coingecko)

Similarly, Paxful, one of the leading peer-to-peer trading platforms globally, was greatly influenced by Indian traders as its trading volume multiplied from around $576,000 in May 2019 to $8.97 million in July 2020. What is more, CoinSwitch, which started operations in June, had enrolled more than 200,000 Indian users resulting in $200 million worth of traded assets.

Crypto trading has enticed Ananthi Reeta to write for CoinQuora. She consistently contributes news and feature articles. She has covered several different blockchain and crypto niches, especially altcoins.