Crypto and Government - Challenges and Growth Prospects

I believe that cryptocurrency is a revolution and it is in the early phase. Although I can say that the last five years have been a game changer in this segment however there is a lot to happen and if we are expecting mass adoption then we need to educate more people about it. While many countries are doing great work with the adoption of blockchain and cryptocurrency still some countries are not putting their best foot forward. India is also one of the countries where crypto has always been in a controversial state. I started my crypto journey in 2017 and since then I have been seeing such things happening in the country.

RBI is one of the government bodies in India and their job is to protect consumers from any financial scam but they have been calling Crypto a scam since the beginning. Now they have stopped calling crypto a scam but still their stand is not positive towards the crypto market. In 2000 and 18 they implemented a ban on banking services for the crypto industry. It was the time when this market was not doing well and it kind of crashed after the 2017 bull run. Multiple crypto exchanges in India could not survive for long and they had to stop their operations. Even some of the exchanges shifted their business entity to another country because of banking restrictions in India.

Crypto Adoption is growing

Despite all the challenges in India, the overall adoption of crypto has been growing in the country. Even now the road to crypto adoption in India is not easy and the government has implemented a heavy taxation on the crypto industry. Ideally, there is a tax lab for every taxpayer in the country but there is a catch if you earn any money through crypto then you will not be getting the benefit of any slab and you are required to pay a 30% flat tax on the income. You also need to pay 1% TDS every day however this is not a liability but still it affects traders because the percentage is quite high. I asked for the last data through one of the surveys it has been identified that India has got over 200 million users in Crypto as of August 2023 and this is expected to grow further.

As of August 15, 2023, India's crypto user count is over 206 million. This is an increase from 77.6 million in 2020–2021 when more than 60 million Indians entered the crypto market

Crypto is in Neutral State

Currently crypto is in a neutral state in India where we can say that it is not illegal to trade or hold crypto but this is also not legal in the country. Crypto is not legal tender in the country but this has also not been classified as digital assets and because of that there are many issues that crypto exchanges as well as users are facing. The government has been trying to build more control and they are trying to put some regulation in the Crypto market so that they can control transactions as well as the overall ecosystem. Crypto is decentralised but is still the Indian government is still trying to put some sort of regulation where they can have some control over this industry. It is still an unorganised sector in India and because of very little clarity on the rules and regulations, people are not much aware of how they need to proceed. In the last few years, there has been more clarity but still, it is not enough that help people do the right things in the market.

I believe that it is the government's responsibility to share more education about Crypto and how it works but sadly such things are not happening. Because of this trend towards Crypto many companies and individuals have moved out of India and most of them are settled in UAE as the Crypto rules are quite friendly over there. By providing a favourable crypto infrastructure government can support the sector that is capable of generating a great number of employment.

Most of us are aware of how the Indian government took action against some leading international exchanges in the country as they started banning the applications and their web URL. Now most of these exchanges are not accessible for users in India however with VPN some users can access but I don't think that is the right approach. Overall I can say that the way things are happening in Crypto in India by the government and its relevant authorities is not good and I expect them to be more particular and friendly in a way that can help them as well as the industry. We can't ignore the fact that this is one of the industries that has a lot of potential to empower the economy as well as create multiple sources of revenue for both individuals as well as the government.

Thank you

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