State of the Crypto Market in India
Earlier this month, the central bank of India, the Reserve Bank of India (RBI) caused a furor in the cryptocurrency market by announcing on April 5 that it would no longer allow financial institutions such as banks, payment service providers as well as non-banking financial services companies to deal in cryptocurrencies.
Consequences of this Ban
Despite the RBI’s claims the ban was put in place to protect the interests of consumers, this action has not been received well by the market. According to tech investor and cryptocurrency expert, Tim Draper, who has a lot of experience in Indian markets, this is a huge mistake being made by the Indian government.
The Indian community also launched a petition on Change.org, requesting the government to rescind this decision, warning the government that the cryptocurrency industry had created tens of thousands of jobs for the youth of the nation – something the government hadn’t been able to do. If the government were to continue with its ban, there was a strong possibility of a brain drain, with developers leaving the country to greener pastures.
Conflicting Messages from the Indian Government
The challenge that cryptocurrency users are facing in India is the government’s blow-hot-blow-cold attitude towards the crypto industry. The government says it welcomes crypto technology but, at the same time, discourages the use of crypto currency. It’s almost as if the government doesn’t quite understand how blockchain technology and cryptocurrency works.
And then, the government announced that it was going to tax all cryptocurrency investments, after which tax notices were sent out to more than 100,000 cryptocurrency users. Subsequently, the ensuing confusion led to a drop of Bitcoin’s price from $10,300 to $9,512 in less than 24 hours.
The Indian government needs to understand that if it wishes to attract Blockchain-based technology firms so that there is growth in investments, technology as well as innovation in the country, then it has to take a clear-cut, liberal stance.
There are already signs that major companies that use crypto technology are looking to take their investments elsewhere. The CEO of BuyUCoin, Shivam Thukral bluntly stated in an interview that they were moving their company to another country that was more open to change.
However, there is also speculation that the action taken by the RBI could be to create room for its own cryptocurrency – named after the Indian Goddess of wealth – Laxmi.