11th November 2020: The Supreme Court overturned a ban imposed by the Reserve Bank of India (RBI) on cryptocurrency payments on 4th March 2020. The results can also be witnessed in the country’s famously conservative banking system that is making nascent forays into the crypto space. The global crypto players are also not being affected by the hindrances in the Indian crypto market and are preparing to tap into an opportunity potentially worth $12.9 Billion.
While Bitcoin was the first cryptocurrency to see widespread distribution, the birth of the industry gave rise to other alternative coins like Ethereum, Litecoin, Ripple, Monero, and more. The growing popularity of the Cryptoassets witnessed Bitcoin valuation to go over 11 lakh INR in the Indian market. The instability in the US market along with other factors has promoted a resurgence of interest and the value of Bitcoin has been rising towards 2017 levels when it peaked at approximately Rs. 12.5 lakh for one Bitcoin.
In the same context, Mr. Sathvik Vishwanath, CEO of Unocoin; India’s first cryptocurrency exchange says,“We have actually seen the all-time high of $20,000 in December 2017. I think at that time the increase in price was more related to fear of missing out for the investors. But this time there are more genuine reasons for the price increase like American hedge funds adding crypto assets to their balance sheet, PayPal allowing access to its millions of customers to buy and sell cryptos followed by an announcement from DBS bank that they will soon start providing trading services for crypto to their clients. It looks like the growth we are seeing now is more sustainable and the global recession and pandemic is fuelling it”
On the contrary, due to the worldwide effect of the pandemic, the investors are also growing increasingly cautious and eyeing alternative investment avenues that not just offer long-term investment options but can also be easily liquidated. Here, Bitcoin builds a strong case for itself. Interestingly while there are some very stark similarities between the buying of traditional commodities like gold and its new digital counterpart, several attributes also evidently showcase the disparities between the two assets. It’s recapitulating the argument of Bitcoin being the new digital gold.
Meanwhile, global attitudes are also clearly softening towards the use of Crypto assets. The IMF even released a video explainer on crypto in August 2020 with a neutral approach to the subject. Thus, ultimately, the nature of regulation that India decides to latch on to will be the crucial determinant. If the country goes down the path of blanket criminalization, it may lose a seat at the table in the coming second wave of fintech innovation.