India is preparing to clamp down on its booming cryptocurrency trade with a new law likely to be introduced in parliament this month.
Details of the legislation remain unclear, but the government wants to ban all private digital currencies, with some exceptions.
India hopes that a ban would pave the way for the Reserve Bank of India — the country’s central bank — to gain control over digital money, despite concerns over the lack of advanced data protection laws.
The central bank has repeatedly warned cryptocurrency could pose “serious concerns on macroeconomic and financial stability,” while Prime Minister Narendra Modi in November said cryptocurrencies could “spoil our youth.”
The government has also warned that unregulated crypto markets could become avenues for money laundering, fraud and terror financing.
At least eight cases of cryptocurrency-related frauds are under investigation by the Directorate of Enforcement, India’s agency tasked with fighting financial crime.
But despite warnings from the government and details of the planned bill still in the shadows, many cryptocurrency investors are hoping they will still be able to trade.
“Even if there are restrictions imposed by the government, I hold multiple trading accounts in domestic, as well as foreign exchanges,” Pritha Sengupta, a 25-year-old entrepreneur, told DW.
“Some of my trades have resulted in very attractive returns… almost over 500 times and bank deposits hardly give us less than 7% in a year,” Pritha added.
Also unfazed by government warnings, graduate Manisha Singh insists that the crypto market is a “great way to build up wealth” in India.
“The best part is that it helps us invest in small amounts. I have sold Bitcoins at a profit,” Singh told DW.
India’s crypto boom
India has become one of the biggest markets in Asia for cryptocurrencies and one of the fastest growing in the world. The country has 15 home-grown cryptocurrency exchange platforms.
Between 15 and 20 million people in India are estimated to own cryptocurrencies, with holdings totalling approximately $6 billion (€5.31 billion), industry figures indicate.
The market for cryptocurrency and blockchain technology has surged significantly in recent years, especially during the COVID-19 pandemic lockdowns, when much of the country’s population was forced to stay at home.
The local crypto market exploded when the Supreme Court overturned a previous ban last year, growing 641% between July 2020 and June 2021, according to cryptocurrency research firm Chainalysis.
Bitcoin saw an average return on investment of 66% in November and — along with cryptocurrencies Mana, Dogecoin and Ethereum — traded the most in volume during the festive season of Diwali in early November.
Film and cricket stars have also endorsed home-grown crypto exchanges by fronting advertising campaigns for platforms like CoinSwitch Kuber and CoinDCX, both of whom have upped their social media campaigns.
Indians are set to invest more than $10 …….