Why is it important to have regulations on cryptocurrencies in India?

Does India need crypto regulations?

Crypto regulations in India

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Leaving the bears and bull out of the equation, it is irrefutable that the crypto bubble is already too big to ignore. The crypto market is currently worth more than half a trillion dollars, which equates to ~10% of the $5 trillion that is in circulation across the globe.

The unprecedented exuberance of cryptocurrencies has established them as a viable way of fundraising for start-up companies. Besides establishing themselves as an effective fundraising tool, cryptocurrencies also gave birth to a variety of scams as there were little or no regulations involved.

The absence of any explicit legal framework around cryptocurrencies will only create chaos which is why it is imperative to have certain regulations in place to make the token creators accountable to an authority.

Blockchain spring

According to a report published by Dappros, a London based blockchain consulting firm, India succeeds US with over 19,627 blockchain developers while the US has nearly 44,979 developers as of October 2018.

This essentially means that India can easily get an edge over other countries when it comes to captivating from applications based on blockchain technology.

Although the blockchain spring can be attributed to the growth of cryptocurrencies, the technology has the ability to revamp many fields such as VR, real estate, database management along with many others.

Emerging economies like India can capitalize and see tremendous benefits from the application of blockchain technology in diverse verticals such as healthcare, agriculture, VR, real estate, database management along with many others.

The Indian take on Cryptocurrencies

Although the Indian government has an approving view for the blockchain technology, the regulatory bodies have been contemplating on ways of dealing with the potential AML/CFT and consumer protection issues related to cryptocurrencies.

India’s cautious approach towards certain elements of the blockchain, such as cryptocurrencies and digital assets has not only hindered the crypto spring in the country but also has driven global VCs and Institutional investors out of the country limiting the exposure to the regulatory risk involved with cryptocurrencies in India.

This prudent approach has made it difficult for crypto-related institutions in India to operate. Global investments in the blockchain ecosystem have been considerably low in India due to the uncertainty revolving around crypto regulations in the country.

While the legalization of cryptocurrencies in India could be a game changer for the crypto industry globally (adoption-wise), Indian regulatory bodies have been hawkish on cryptocurrencies lately.

Despite the uncertainties surrounding the cryptocurrencies, the Indian government has set up a committee to look into prospects and consequences of legalization.

To sum it up…

Although there is no official statement or declaration by the government of India on legalizing cryptocurrencies yet, the authoritative bodies have made it clear that the government is heading towards devising legislation that will potentially provide better cryptocurrency protections for “the common man”.

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Why is it important to have regulations on cryptocurrencies in India? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.