Newly Proposed Cryptocurrency Bill 2021 – Outcome and Future of Cryptocurrency in India
The newly proposed Cryptocurrency bill in India has sparked a lot of heat in the Crypto exchange platforms. Amid this situation, some investors sold off their holdings and some are still sitting strong. The industry expects the Government to consider their inputs and reasonably regulate the market without tensioning the market as a whole.
This time, a lot of people would be glued to the updates related to cryptocurrency trading in India. It came to everyone’s attention when different social media pages began flashing updates that the Indian Government is planning to ban cryptocurrency trading in India. That turned out to be partially true. In a recent announcement, the Government of India clarified that with the Cryptocurrency and Regulation Official Digital Currency Bill 2021, it was only looking to ban some private cryptocurrencies. Some exceptions though are expected to be made making crypto investors heave a sigh of relief.
With the introduction of the Cryptocurrency bill, the Government would be looking to give a go-ahead to ban some of the private cryptocurrencies. The official statement came in a bit late as various social media pages began flashing the half-painted picture, a lot of investors went on a selling spree. This caused the prices to drop by an average of 11%.
Experts of the Cryptocurrency market called this a premature panic. This is normal with every exchange board as investors begin selling their holdings to avoid any loss that they might have to incur. One Cryptocurrency that was majorly highlighted was Ethereum. It witnessed a fall of 15% in its market value. The rise and fall are a normal part of the crypto exchange board. These occurrences are being talked about as India is on the edge of making history in the Crypto market.
Investors who took a hint from their experience retained their holdings, causing the market to slightly recover from the loss. This was reported by CoinSwitch Kuber, CoinDCX, and WazirX. Every Crypto exchange platform, including the ones that we just talked about, functions 24/7. This is in sharp contrast to the traditional currency exchange board and the stock market.
The trading volume continued to surge and touched the mark of 50% the very next day. Even though it was showcased that a lot of investors had sold their holdings, The Founder & CEO of BuyUcoin, Mr. Shivam Thakral, came out to express that only 10-15% had sold their holdings on their crypto trading platform, as reported by The Economic Times.
The selling spree has paved the way for seasonal investors to get onboard further with their investments. They rarely trade but when they do then they ensure there is a lot of profit that can be generated. A seasonal investor prefers to see his or her investment grow over buying more unnecessary units. The lower prices that currently prevail in the crypto exchange have encouraged seasonal investors to invest more and take advantage of the lower prices. Like investors on a selling spree, seasonal investors are on a buying spree.
The condition sounds somewhat clumsy. You would have to hold on to your seats for a few more moments. The confusion lies as to what is really happening in the Crypto market. Some investors are selling their holdings as the Government plans to ban a few private cryptocurrencies. This has caused the prices at all the platforms to go down, encouraging many seasonal investors to buy more units at a lower price.
The Effect
The overall effect has many elucidations with one making the majority of the headlines everywhere.
The prices as of November 24, 2021, 6 pm, fell for every Cryptocurrency. There was no exception to this fact. Bitcoin dropped by 9.28% while Ethereum dropped by 11.95%. The overall market value of Dogecoin got down by 11.89%.
This presents a gloomy picture for many investors who still have their holdings tight into their Cryptocurrency portfolio. India is expected to have a lot of effect on the global trade of Cryptocurrency. The country houses many owners of Cryptocurrency. The same was acknowledged by Jay Hao, the Chief Executive Officer of OKEx.com. He said that India was home to the highest number of Cryptocurrency owners. Every development that occurs would be closely watched by investors across the globe.
With the discussion itself, India has been coined to have embarked on an exciting journey. All the developments will have global implications on Cryptocurrency. One can only expect wonders to happen after the Government takes a final call on the Cryptocurrency bill. However, in the recently concluded winter session of the Parliament, the crypto bill did not find a place on the table.
The Size of Crypto Market in India
Base Case – Growth and adoption of CryptoTech in India continue at the current rate based on specified factors. Best Case – Growth and adoption of CryptoTech in India accelerates rapidly with two-sided growth – higher demand-pull and investments in development and maturity of CryptoTech.
Retail crypto investors in India have already invested $6.6 billion in some form of crypto assets, and this number is estimated to reach $15.6 billion by 2030.
With so many eyes turning to India, it would not be a surprise to say that India holds a major key to the world of Cryptocurrency. The country has a lot of young investors who are continuously looking to multiply their wealth. As of October 2021, there was an estimated 10 crore (100 million) crypto owners in India –– this number surpasses every other country in the world. The United States comes in second place with 2.74 crore people owning cryptocurrencies.
A discussion on banning cryptocurrency erupted last year as well; however, the Supreme Court of India overturned the decision and decided to retain all the holdings in the market. Since then, the explosion has been approximately 600% by Chainalysis. More interesting investors have come forward to own a cryptocurrency of their choice.
These reports signify that the Cryptocurrency bill would be extremely important for many people in the country.
Government’s Call
Irrespective of what the Supreme Court said, the Reserve Bank of India has warned against trading in unauthorized cryptocurrencies. Such trading is believed to have a huge impact at the macro level. They are also expected to destabilize the financial market in the country. Every rupee that could have been spent on authorized investment bonds is instead being spent on something that is yet to be regulated.
The Government of India announced that it would not entirely ban cryptocurrency. It would look to ban only private cryptocurrencies. This call was taken after many industry experts were consulted in a high-level meeting that was chaired by the Prime Minister of India himself.
The Cryptocurrency bill is expected to make an exception in prohibiting the Cryptocurrencies while probably taxing them in an appropriate manner. In other words, every attempt is being made to legalize as many cryptocurrencies as possible, which is good news. The Government understands that a lot of investors hold their holdings in the Crypto market. Any wrong decision would imbalance every other market that exists in India.
The Cryptocurrency Bill is a way to handle all the serious concerns that the cryptocurrency market currently poses without any regulation from the relevant authorities.
While every crypto investor will be looking at any new updates by the RBI and the government with bated breath, some experts believe there is no cause to worry. IndiaTech CEO, Mr. Rameesh Kailasam believes that there is a likelihood that the government may not actually bring out a new crypto bill after all, but only if there are accommodative changes made in already existing laws –– such as laws on money laundering and international transactions.
Even if the government decides to bring in a fresh crypto bill, it will have to go through the entire gamut of bringing a law into action, as it will need law ministry approval, cabinet note, Parliament introduction, debate and agreement from both parties, and a presidential assent before coming into action. And the latest news we have is that there is no confirmation from the government yet on whether the proposed cryptocurrency bill will be featured in February’s Budget session of the Parliament yet. Investors can thus hope to see it all work out in their favour as of now, and there is absolutely no need to press the panic button.
