India Crypto Renaissance: Industry Sees Rebirth as RBI Crypto Ban Lifts

Among industry participants and investors, India is emerging as a market to watch for following the overturn of a crypto ban that was placed by the Reserve Bank of India back in April 2018. The prominent investors looking to get a piece of India’s nascent crypto space include Tim Draper, a billionaire investor who obtained thousands of Bitcoin from 2014’s Silk Road auction.

Draper recently said that he has “met several Bitcoin and crypto startups” from India and that he “hopes to be able to fund a number of them.” He also recently showed his excitement for the move by the Supreme Court of India in striking down the Reserve Bank of India’s ban on financial institutions providing crypto related services, tweeting, “A Renaissance for India. Now crypto is legal.”

Local firms spring into action

Apart from Draper, other investors who have shown interest in India’s crypto market include crypto exchange CoinDCX. On March 12, CoinDCX announced $1.3 million in funding that would be used to increase crypto awareness and adoption in India. The exchange is looking to spearhead a long-term project called TryCrypto in an effort to introduce 50 million consumers in India to cryptocurrencies.

CoinDCX was established in 2018 and already boasts of a recently closed Series A funding round led by Polychain Capital, HDR Group (BitMex operators) and Bain Capital Ventures, to mention just a few.

The Mumbai-based exchange secured $3 million in funding, to which its CEO Sumit Gupta said, “This successful investment round will go a long way in funding our vision of accelerating India’s growth into a $5 trillion economy.”

Also convinced of the potential held by India’s crypto market is Binance, one of the largest crypto exchanges in the world. In November last year, Binance purchased WazirX, an Indian crypto exchange. The move was applauded by Indian crypto experts such as Kashif Raza as one that will give “a morale boost to India’s startup scene.”

With the backing of Binance Coin (BNB) and Binance USD (BUSD), WazirX has set up $50 million in funds intended to go to local blockchain projects. CEO Nischal Shetty said, “With this fund, we want to encourage and enable more and more founders and teams to come in and build. This initiative also shows the incredible potential that the Indian blockchain ecosystem has to offer.”

What makes India’s crypto space ripe for investment?

It is evident that the recent interest from investors and companies toward India’s crypto market is as a result of the March 4 ruling by India’s Supreme Court. The ban that had previously been placed by the Reserve Bank of India on all crypto-related bank services was declared unconstitutional, much to the reprieve of the country’s crypto community. However, in addition to the court ruling, industry watchers and experts believe there is more to India than a seemingly positive regulatory environment.

Sharat Chandra, an advisor on emerging technologies, believes that what makes India a good market for a crypto renaissance is the fact that the country is home to nearly 190 million unbanked individuals. 

Chandra told Cointelegraph that, “Crypto startups can bring those unbanked into the banking fold and further the cause of financial inclusion.” He added, “India retains the top spot when it comes to foreign remittances, and crypto can not only reduce turnaround time but bring down remittance costs drastically.” Gupta agrees with Chandra, pointing out to Cointelegraph:

“India has 1.3 billion population out of which only 5 million are in crypto, which equates to 0.4%. Even with 0.4% of the people in crypto, Indian crypto market has a good volume of daily crypto trading. CoinDCX is witnessing daily volume of $10–15 million, which shows that there is huge potential for growth.”

Dileep Seinberg, the CEO and founder at Exioms — a Delhi-based blockchain solutions provider — also weighed in on the matter, telling Cointelegraph:

“India has 3 key elements that make it a good and large market. First, the young generation of users who can operate and trust the internet and mobile-based Apps for financial transactions. Second is penetration of 4G and faster internet services everywhere in India and third is the access of smartphones at very low cost.”

Not yet out of the woods

Despite the optimism shared by India’s crypto community, regulatory uncertainty still persists. According to Sharat Chandra, “The war against RBI’s cryptocurrency ban was on flimsy grounds and the RBI can very well challenge the verdict of the Supreme Court of India.”

Already, the reserve bank of India is planning to file a petition against the recent ruling by the Supreme Court on the controversial crypto ban. A report by the Economic Times shows that the RBI fears a crypto renaissance in the country threatens the country’s banking system. Furthermore, the ruling on a pending bill by India’s parliament can still introduce an exclusionary legislative apparatus for crypto and blockchain related businesses. 

Related: Bitcoin Price Correlates With Traditional Assets, but Not Entirely

To add to all this, the current coronavirus pandemic has dealt a blow on the entire crypto market as well as the global economy. Chandra, however, believes that people are optimistic, even if the recovery in digital asset prices might take longer than expected. Gupta opined that, “Less than 1% of the global world population is in crypto assets. This means the crypto market is largely uncorrelated to major global assets in the world such as stocks, bonds etc.” He added:

“We have seen a downward trend in crypto market prices after the Covid pandemic but people still have faith in crypto and are dealing and investing in the crypto market. Bitcoin’s hashrate is still at 105 Ehash/s which shows people continue to believe in Bitcoin. And as Bitcoin drives the overall crypto market in terms of prices, this proves people have faith in the crypto market.” 

Full steam ahead?

Despite a lingering cloud over the future of cryptocurrencies in India, industry watchers like Seinberg and Gupta share optimism that a bright future is around the corner. Seinberg believes:

“Going forward in the next 2–3 years, India will have its own Cryptocurrency at the place. RBI is focusing on Innovation and NPCI has already launched Vajra Blockchain Platform for wider adoptions.”

Seinberg also believes that, “The recent visit of Tim Draper to India and the commitment of new investments will inspire and build confidence on Indian Institutional Investors.” On the other hand, Gupta said that winning the court case is just the first step, adding, “Now, the next big push is to incorporate smart and sensible crypto regulations in India.” With emerging reports of plans by the Indian government to regulate cryptocurrencies, Gupta believes:

“This is the step in the right direction as having correct regulations in place will help to open up and boost many crypto businesses in India. Additionally, individuals will be open to investing in cryptocurrencies.”