Future Of Crypto In India: How Bitcoin ETFs, Regulatory Clarity Can Help

India, with its dynamic economic ecosystem and technological prowess, stands at the crossroads of the crypto-transformative journey.

As of now, India does not possess a dedicated regulatory authority exclusively catering to cryptocurrencies.

Source : Getty

In recent times, the cryptocurrency industry has undergone a noteworthy transformation, evolving from a limited group of developers to a community that has fostered a trillion-dollar economy. This evolution has been accompanied by a surge in popularity over the past decade, a trend that gained momentum following the introduction of Bitcoin.

The global landscape of cryptocurrency is witnessing an extraordinary surge, with the utilisation of digital currency experiencing unprecedented growth. As the momentum of this digital revolution continues to build, its impact on various nations is becoming increasingly profound.

India, with its dynamic economic ecosystem and technological prowess, stands at the crossroads of this transformative journey, poised to play a pivotal role in shaping the future of cryptocurrency within its borders and beyond.

Role Of India In Global Crypto Market

Within the realm of cryptocurrency, India is establishing itself as an active and dynamic player. As more and more institutional players are getting into the sector with a growing number of start-ups, the enthusiasm is mirrored by retail investors, signifying a wealth of untapped growth prospects.

A recent study conducted by Statista has revealed that India is poised to make a remarkable impact, aiming to encompass a staggering 156 million crypto users by the end of this year. If this trajectory holds, India could potentially commandeer more than half of the globe's crypto user base by the year's end.

However, for the wide-scale adoption and integration of cryptocurrencies, a concerted effort from institutions and regulators is imperative. Education on the potential benefits of cryptocurrencies and the risks associated is key to fostering acceptance among the general public.

Encouragingly, numerous institutions have taken up this mantle, making commendable strides in disseminating awareness and understanding, thereby contributing to the gradual transformation of India's financial landscape.

Increasing Regulatory Clarity In India

The regulatory landscape surrounding the crypto sector has been experiencing rapid evolution in India and across the world. Following the establishment of taxation regulations in 2022, a pivotal development occurred in March 2023, as India extended the ambit of the Anti-Money Laundering Act to encompass cryptocurrencies. This pivotal step brings cryptocurrency exchanges, NFT marketplaces, and custody service wallet providers under the jurisdiction of the law, entrusting them with the legal responsibility of vigilant monitoring and timely reporting of any suspicious financial transactions.

To comply with the new regulations, these businesses will be required to register with the Financial Intelligence Unit (FIU) and adhere to other mandatory processes outlined in the Prevention of Money Laundering Act (PMLA). By integrating cryptocurrencies into the existing anti-money laundering framework, India aims to enhance financial transparency and mitigate the risks associated with illicit activities in the crypto sector.

As of now, India does not possess a dedicated regulatory authority exclusively catering to cryptocurrencies. Nevertheless, this recent stride endows the FIU with a considerable role in supervising crypto-linked activities within the nation. The incorporation of cryptocurrencies into the purview of the Anti-Money Laundering Act signifies the Indian government's unwavering resolve to confront potential vulnerabilities while advocating for the judicious utilisation of digital assets.

Crypto to be Part of a Portfolio of all Investors

As the financial industry evolves each year, new investors will start to consider the ramifications of investing in cryptos. Being a nascent market now, volatility is likely, but the volatility may slowly decrease with more and more people stepping into the crypto space. Every investor might hold crypto as part of their portfolios, making this asset class for everyone.

How Can Bitcoin Spot ETFs Impact Indian Crypto Market?

In June, notable players in the financial realm sought licenses to establish Bitcoin exchange-traded funds (ETFs). Renowned entities such as BlackRock and others have made these applications. Although the US Securities and Exchange Commission (SEC) has yet to give its nod to any Bitcoin ETFs, the recent surge in interest indicates the SEC's meticulous evaluation process. This augments the likelihood of eventual approvals in the foreseeable future.

If the SEC grants approval on the Bitcoin ETFs, it could potentially amplify accessibility while legitimising Bitcoin investments. The introduction of Bitcoin ETFs could simplify the path for Indian investors to access this cryptocurrency, potentially ushering in a new era of acceptance across the industry. Bitcoin ETFs could position themselves as highly sought-after investment avenues for both individual and institutional investors.

The escalating interest in Bitcoin ETFs serves as a concrete testament to the cryptocurrency sector's progression toward maturity and eventual mainstream acknowledgement. The repercussions of Bitcoin ETF approvals extend beyond national borders, potentially resonating with the Indian crypto market.

Overall, these scenarios have the potential to bolster investor confidence and foster increased adoption among both Indian retail and institutional players.

(The author is the CEO and Co-founder of Mudrex, a global crypto investing platform)

Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.