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Has cryptocurrency become too 'mainstream' in India to be banned?

Considering cryptos' growing popularity among millennials and the sector's employment potential, can India realistically completely ban - or even partially ban - the technology? Let's understand

Cryptocurrency, bitcoin, ripple

Ahead of the winter session of Parliament, source-based media reports are again speculating that the pending Bill to regulate cryptocurrencies will come up in this session.
 
But unlike the reports in February this year, which were suggesting a complete ban on cryptocurrencies, a complete ban appears unlikely this time around.
 
The reason, sources say, is that crypto in India has become too big for a ban.
 
Too many people, around 20 million according to WazirX CEO Nischal Shetty, have dipped their hands in virtual currencies. And India is being seen as the fastest-growing crypto market in the world.
 
The sector has spawned two unicorns already this year, CoinDCX and CoinSwitch Kuber.
 
We are also seeing crypto exchanges beating digital stockbrokers in terms of the user base.
 
MORE INTEREST THAN STOCKS?
The user base of top platforms

  • WazirX: 8.5 million
  • CoinSwitch Kuber: 11 million
 
Both higher than…
  • Zerodha: 7 million
 
WazirX has 8.5 million users. CoinSwitch Kuber has 11 million. Both have more users than India's largest stockbroker, Zerodha, which has 7 million users.
 
It’s amazing how much things have changed in a year.
 
In March last year, the Supreme Court had quashed the RBI circular that barred banks from providing services to cryptocurrency exchanges.
 
One year later, Crypto companies are the toast of the town.
 
Switch on the TV and you see ads hailing Bitcoin as a great investment instrument. Top Bollywood actors, from Ranveer Singh to Ayushmann Khurrana, are seen promoting CoinSwitch Kuber and CoinDCX respectively.
 
Bollywood actors are launching their non-fungible tokens or NFTs, which are bought and sold using cryptocurrencies.
 
According to industry estimates, Indians have invested around Rs 6 lakh crore cumulatively in crypto assets.
 
Young investors in tier 2 and 3 cities, who don’t understand much about the stock market, have taken a fancy to virtual currencies such as Bitcoin, Ethereum, Cardano and Solana.
 
For CoinSwitch Kuber, which recently became a unicorn, the average age of over 11 million users is 25 years. And 55% of its users are based in large cities like Delhi and Mumbai. For CoinDCX, the other crypto unicorn, 75% of its investors are aged between 20 and 34 years.
 
The number has swelled too much for crypto to continue being unregulated.
 
The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) don’t appear too keen to regulate cryptocurrency.
 
So, the government seems to have worked out an alternative in the Gujarat International Finance Tec-City (GIFT).
 
According to reports, the Centre may task the International Financial Services Centres Authority or IFSCA, based in Gandhinagar’s GIFT City with overseeing cryptocurrency trading.
 
Remember, this is in line with what crypto exchanges have themselves proposed to the Finance Ministry in the past.
 
The government is also considering levying GST on all transactions, including cryptos and NFTs, that happen over a blockchain.
 
There are several other factors that have contributed to the industry becoming mainstream.
 
Among Indian tech companies, crypto startups are hiring big.
 
More than 50,000 professionals are working in the Indian crypto industry, and the sector is likely to create 30% more jobs in the coming months, according to a Nasscom and WazirX report.
 
Further, the total risk funding in Indian crypto and blockchain startups has touched over $587 million this year, compared with just $37 million in the previous year, according to industry tracker Tracxn.
 
However, despite this positive momentum for the Indian crypto industry, sceptics continue to advocate for a ban.
 
Recently, the Rashtriya Swayamsevak Sangh or RSS chief Mohan Bhagwat, during his annual Vijaydashami or Dussehra speech, mentioned obscene images on OTT platforms, drugs, and Bitcoin in the same breath, calling for urgent regulation for all three.
 
On Bitcoin, he said it has the potential to destabilise economies.
 
The RSS, the ideological parent of the ruling Bharatiya Janata Party (BJP), while not directly involved in policy making, uses the annual Dussehra speech to spell out its firmed up position on policies that it feels the government should adopt.
 
This year was the first time crypto figured in the RSS chief’s speech.
 
The government definitely has a tough balancing act on its hands.