With a young population and a background of technological innovation, India is currently seeing growing public interest in cryptocurrency. However, unlike other countries which have either embraced or banned cryptocurrencies, India has taken some kind of middle ground.
India’s Crypto Market
As per Chainalysis’ Global Crypto Adoption Index, India has the world’s second highest crypto adoption rate. This sudden increase is attributed to factors like the tech-savvy people who want to use the internet and get high rates of return on foreign currency exchange markets.
Central Bank Digital Currency (CBDC)
Cryptocurrency isn’t illegal but it is still not recognised by Reserve Bank of India as legal tender. This Central Bank Digital Currency (CBDC) was proposed under the Cryptocurrency Bill 2021 which is yet to be passed. The Bill's stand on private cryptocurrencies is still vague.
Regulations in crypto market
Investors face ambiguity due to lack of clear regulations. Despite government taxing such gains at 30%, there is no law governing consumer protection and exchange regulation.
Investing in Crypto: The Risks
The potential of this market to yield high returns is undeniable, but this gain comes with certain considerable risks.
1. Price Fluctuations: Cryptocurrency prices can experience wild swings which may lead to losses.
2. Hacks and Scams: The crypto space is filled with con artists and young investors are easy prey for them. So, it is very important for youth to be careful while getting involved in the same.
3. Regulations: Uncertain regulations will always exist which can adversely affect the worthiness of a portfolio.
Investing Tips
1. Educate Yourself: Invest only after you have done thorough research about different types of cryptocurrencies, blockchain technology and Indian cryptocurrency landscape.
2. Start Small: Cryptocurrency is a risky investment, therefore invest a small portion in the start that you can afford to lose.
3. Choose a Reputable Platform: Go for secure and well-established cryptocurrency exchanges when buying or selling.
The Future of Crypto
India’s stance towards cryptocurrencies will probably determine whether or not this financial instrument flourishes in the country. Nonetheless, India’s journey with cryptocurrency remains uncertain but one certainty is the world will watch it closely.