Since the inception of crypto around the year 2008, this peculiar financial asset class has always allured investors. Humans naturally get attracted to things that fulfill greed with combined elements of fear and mystery, and crypto fits perfectly into his category.
Indians are also riding high on the crypto bandwagon despite so many ups and downs in the various crypto coins in the recent past it has not lost its sheen for investors. According to a report by The Economic Times, around 20 million Indians are dealing in cryptocurrencies.
According to research by the website chainanalysis.com which measures Global Crypto Adoption Index across the countries, they have put India in second place globally in terms of adoption by users. This highlights the demand and growth potential of crypto markets in India.
Etherium, Bitcoin, Tether, XRP, and Litecoin are the crème-de-la-crème and take at least 83% of the market.
Although there is progress being made in the crypto investment arena all is not well when it comes to financial sentiments across the world… The current wave of inflation across the globe and the ongoing Russia-Ukraine war has accentuated the financial problems around the world. Several countries have hit multi-year high levels of inflation. To control it, the central banks have started raising interest rates to absorb the liquidity in the market. This has also sucked out money from the crypto markets organizations and hackers. While predicting the future is a precarious business, it does look bleak for cryptocurrencies. Despite the controversies and apprehensions shown by banks and governments, the market is still growing for the same. Therefore, recognizing the acceptance and favor of people.
The governments have also been worried about the potential use of cryptocurrencies by terrorist towards crypto, the Government of India has taken a maiden step toward legalizing and regularizing crypto investments in India. Finance Minister Nirmala Sitharaman in her Union Budget speech, 2022-23 introduced a tax regime for bringing crypto into regulatory brackets. Also, she announced the Government’s plan to introduce India’s own CBDC (Central Bank Digital Currency) called the digital rupee during FY2023. These new developments will definitely change the economics of the future of crypto in India. A strong regulatory system will go a long way in creating a stable and viable economic market for this asset class. It will create confidence and attract more people into the system and will also justify the duties and taxes currently being levied on all stakeholders.
For India, we have to keep very cautious as currently, our not-so-friendly neighbor China rules the global crypto mining process with more than 50% share, while the United States has just 7%. Aside from its vast mining farms, China also produces the necessary equipment. India is yet to enter the arena when it comes to the mining of currencies. But there has to be a globally coordinated approach while deciding the game’s rules as crypto — are mostly cross-country transactions. Few countries lead in terms of mining and exchanges while investors are in the whole world.
According to a report by Nasscom, the Indian crypto tech industry has the potential to create 8 lakhs jobs by 2030 and is expected to reach $241mn in size. These figures, though encouraging, India still faces a lot of uncertainties and challenges in terms of investor apprehensions and government regulations. Though still in a nascent stage, a strong investor base, presence of a robust financial system and macroeconomic stability will make India a rich ground for the growth of crypto.