In recent months, as Bitcoin has surged in fiat value, India has emerged as one of the most active nations in the crypto space. Indians are investing heavily in cryptocurrency, and across the country businesses are adopting blockchain-based systems en masse. In fact, in recent months crypto has become so popular in India that the government and central bank are both struggling to adopt clear guidelines for its use. This growth trend, should it continue, could fundamentally alter global crypto adoption rates, and cause prices to skyrocket.
The growth rate of Indian cryptocurrency investment is truly staggering. Delhi-based exchange Coinsecure saw registrations more than double during November. Other Indian exchanges such as Zebpay, Unocoin, and Bitxoxo experienced similar growth. Also, the trade volume on these exchanges has more than doubled since the end of August, with an increasing number of investors being high net worth professional traders. In fact, it is safe to assume that Indian investment played a key role in Bitcoin moving past $15,000 in recent days.
Cryptocurrency has a number of characteristics that make it perfectly suited for adoption in India. One trait is its current status as a store of wealth. Savings and investment has strong cultural value in India, which is reflected in the fact that Indian households are by-far the largest consumers of gold in the world. As crypto gains legitimacy, more Indians are choosing to acquire it.
India is also the world’s largest source of expat labor, with millions of its citizens working around the world. Remissions are, in fact, one of the strongest drivers of the Indian economy. Cryptocurrency’s superior ability to transfer wealth across borders is poised to revolutionize the remission industry, making India the most significant player in the process.
Another factor that makes cryptocurrency well-suited for India is the nation’s more than two hundred million citizens that remain unbanked. Addressing this issue, which is a leading contributor to India’s high poverty rate, has become a top priority for the Indian government over the past decade. Crypto is proving successful in helping similar populations in other realms such as Africa and South America, and it has the potential to revolutionize financial access for the poor in India. This fact is especially true given that even in rural and poverty-stricken areas cell phones and Internet access are common, making crypto use a realistic option for even the poorest Indians.
In response to the significant growth in crypto investment, India’s central bank, the Reserve Bank of India (RBI) issued a statement on December 5th, warning of the “potential economic, financial, operational, legal, consumer protection, and security related risks” associated with blockchain currencies. This was the second such warning issued this year, and the third since 2013.
Like many central banks, the RBI has struggled to adopt a clear policy on crypto adoption, but soon it will be forced to do so. The Indian Supreme Court, in response to a petition, has called on a number of federal agencies, including the RBI, to clarify the government’s position on blockchain-based assets. Rumors as to how the government will respond range from it banning cryptocurrency, to it embracing crypto and even issuing its own official version.
Given the tremendous popularity crypto is acquiring in India, it seems unlikely that the government will adopt a hostile position. It is worth noting that India is a fully functional democracy, and thus its leaders no-doubt fear repercussions of a crack down, as has been the case in more autocratic states such as China and Russia. It is more likely that the government and RBI will recognize cryptocurrency as an asset, but stop short of accepting it as legal tender.
All of the factors that make cryptocurrency well-suited for adoption in India should be considered in the context of India’s population of over one billion and gross domestic product of $9 trillion. Any cryptocurrency that gains widespread popularity in such a large nation could easily become the most common worldwide. It is for this reason that India should be considered among the most significant nations involved in the crypto revolution. Regardless of how the government addresses crypto legality, the people of India are choosing to embrace it. The ensuing impact worldwide will no-doubt be enormous.