The fate of Bitcoin in India

The popularity of Bitcoin is on a continual surge everywhere in the world. India is no exception. But still, the pioneer crypto-currency market in India is way behind that in US, UK, Japan or Hong-Kong. In a time when petitions are being filed at Supreme Court and questions are being raised on the future of Bitcoin in India, let us explore what lies ahead in the fate of Bitcoin in India. 

The Question of Regulation

A plea was recently (14th Nov. ‘17) put forward to Supreme Court of India by Dwaipayan Bhowmick seeking a Bitcoin regulatory framework. 

The petition said, “Lack of any concrete mechanism pending the regulatory framework in said regard has left a lot of vacuum and which has resulted in total unaccountability and unregulated Bitcoin (cryptocurrency) trading and transactions. For the delay in such a situation has the seed that can cause grave financial implication on the economy of the country. It is pertinent to mention herein that emerging trend of crypto money if unchecked and unregulated is a threat to exchequers money and financial sovereignty of the country.”

In response, bench of Chief Justice Dipak Misra and Justices A.M. Khanwilkar and D.Y. Chandrachud issued notice to the ministries of Finance, Law and Justice, Information Technology, market regulator SEBI and the RBI seeking their response to the petition. 

While bitcoin enthusiasts, activists and skeptics alike wait for the official response, previous statements given by Key Members of the Central financial body showed skepticism. RBI’s executive director had said previously (Sept. 13) that RBI was uncomfortable with "non-fiat" cryptocurrencies like Bitcoin. 

"Any user, holder, investor or trader dealing with virtual currencies is doing it at their own risk," the RBI had cautioned on its website in February this year.

It is worthy to be noted that neither the government has made it subject to its tax regime nor it has given it a status of a commodity like some other countries have, including US. 

The Present Form

Presently India constitutes a minor Bitcoin market. There isn't any awareness about the crypto-currency in a vast majority of the population and those who do have varied understanding. 

Bitcoin was first introduced in India in December, 2012. Since then, many exchanges have come and gone. The four well known and existing bitcoin exchanges in India are Bitxoxo, Unocoin, Coinsecure and Zebpay.

Zebpay claims that there are more than 1.5 million bitcoin users in India and 200,000 users are being added each month. 

Prospects of Growth

Some believe the Demonetization that India witnessed last year had a massive impact on the growth of Bitcoin in the country. For the first time premium on Indian exchanges crossed $300, leading to many arbitrage opportunities. 

As article splurged on the net linking both the events, Sandeep Goenka, founder of Zebpay, India's largest bitcoin exchange, burst the bubble on his blog. Arguing there was no link, he said, "This is because India has a negligible share in the bitcoin industry. For the international bitcoin community, demonetisation was yawn, a non-event". 

Despite having no major transactional market in India, there is still a unique demand in India for Bitcoin. This demand is due to the fact that India remains the top remittance market in the world. This is because a large number of Indians work outside the country and send money back home. 

 Generally, such transactions with banks cost around 15% of the amount at the beneficiary’s end and the process takes some time. Bitcoin on the other hand, offers a faster and cheaper alternative. 

Other than a tool for remittance, Bitcoin is being as a powerful investment tool and most Bitcoin transactions are asset based. 

Sandeep Goenka, in his Ask about Anything session on Reddit highlighted that after early adopters, a new class of users- The net-worth individuals are seeing bitcoin as an alternative investment and for online shopping, airtime top-up, paying bills and buying gift vouchers.

Judging the many symbols, including the spike in Bitcoin searches in India since the demonetization announcement according to Google Trends, Goenka said they have set a two-year timeline to experience an explosion of digital assets like Bitcoin in the country.

Looking that the way e wallets have exploded IN India and the current wave of Digitization, a bitcoin explosion is likely in India. This is bound to have a significant impact on the global market.