Indian investors continue investing in crypto assets such as Bitcoin and Ethereum despite a looming ban.
According to WazirX, the largest crypto exchange in India, it took 11 days to hit the billion-dollar mark in trading value in February, when compared with 25-30 days in January. The company expects to hit about 2.5X the $1.84 billion total trading value hit in January this month.
“Crypto is a global phenomenon. The moment a Tesla spends $1.5 billion, your wealth in India has increased. Most of your investments are very local, but in crypto, anyone anywhere in the world can affect your wealth. People in India have been joining based on all of this positive news that’s been coming,” said Nischal Shetty, founder of WazirX.
“The only time we saw some negativity was on the day the bill was posted on Parliament’s website. That was because of panic selling, which happened for a couple of days. The activities and prices returned to normal in the next two days,” he added.
The cryptocurrency industry has been nervous since a draft law banning crypto was listed on the agenda in Parliament late last month. The bill aims to “prohibit all private cryptocurrencies in India” and lay the framework for a digital rupee issued and controlled by the Reserve Bank of India (RBI). While the definition of private cryptocurrencies in the bill isn’t clear, many expect Bitcoin and other such assets to be declared illegal.
CoinDCX, another Indian crypto exchange, said there was no drop in trading volumes in February. “On the contrary, due to recent developments in the international market, we have seen interest continue to rise,” said Neeraj Khandelwal, co-founder of CoinDCX. “Irrespective of the government’s decision, investors’ funds will be safe as Bitgo is CoinDCX’s custodian,” he added.
On 8 February, electric carmaker Tesla said it invested $1.5 billion in Bitcoin. The company also said it expects to start accepting payments in Bitcoin, which led to a 10% jump in the price of the cryptocurrency. Two days later, global payments firm Mastercard also announced it would start supporting cryptocurrencies on its network from this year. Stakeholders said such developments had a much bigger impact on crypto trading in India than reports of the ban.
Crypto exchanges on 8 February launched a campaign to convince the government to rethink the plan. A platform called Indiawantsbitcoin.org was formed that allows anyone to send emails to their respective members of Parliament (MP), showing support for crypto in India. Industry estimates say trading volumes in India grew sixfold in 2020.
Mint reported on 12 February that the proposed cryptocurrency bill may allow holders of such assets to exit before its anticipated ban, but may put a heavy penalty on its conversion to a legal asset.
The form and manner of declaration and how existing holders of cryptocurrency should dispose it of will be prescribed either in the law or through the rules to be notified later, Mint reported, citing a finance ministry official who spoke on condition of anonymity.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which may be tabled in the ongoing budget session, is intended to “create a facilitative framework for the creation of the official digital currency to be issued by RBI. The bill also seeks to prohibit all private cryptocurrencies. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the Lok Sabha secretariat said in a bulletin.