EXPLAINED | How India Is Trading Cautiously On Cryptocurrencies

The Union government is mulling to move a Bill in Parliament banning all private cryptocurrencies in India, barring a few exceptions, and create guidelines to regulate the digital currency

Around 2 crore Indians currently deal in cryptocurrencies, according to industry estimates. Representational image | Photo: Getty

New Delhi: Cryptocurrency is the new flavour of the season.

Amid a global surge in digital money, cryptocurrencies are making headlines almost daily in India.

Cryptocurrencies, which are volatile in nature, are not considered legal tender or coins in India. There also has been a notion that the Indian government may ban private cryptocurrencies. However, that doesn’t stop some Indians from investing in the most popular digital currencies, such as Bitcoin, Ethereum, and others.

Recently, the Reserve Bank of India (RBI) has issued warnings on trading in cryptocurrencies. Governor Shaktikanta Das in his address stated that more debate and discussions on cryptocurrencies are needed before a formal introduction of cryptocurrencies in India. Das said that the caution should be taken seriously. Now, the Centre is mulling to move a Bill in Parliament banning all private cryptocurrencies in India, barring a few exceptions, and create guidelines to regulate the digital currency.

A comprehensive Bill on cryptocurrencies is likely to be tabled for the Cabinet nod during the winter session of Parliament. In response, all major cryptocurrencies saw a dip of around 15 per cent and more, with Bitcoin down by around 18.5 per cent, Ethereum fell by 15.5 per cent, and Tether down by 18.2 per cent, respectively.

Nikhil Kamath, founder of online broking platform Zerodha, raised his concern in a tweet: “Is the Indian govt banning cryptos? What happens to everything in circulation already?”

Is the Indian govt banning cryptos?

What happens to everything in circulation already?

— Nikhil Kamath (@nikhilkamathcio) November 23, 2021

According to industry estimates, around 2 crore Indians currently deal in cryptocurrencies, with total crypto holdings of Rs 40,000 crore.

So, before jumping on the bandwagon, we must know a few things related to cryptocurrency.

What Is A Cryptocurrency?

A cryptocurrency or crypto is a collection of binary data, which is designed to work as a medium of exchange and it works using a technology called blockchain. These currencies can be used as a mode of payments and can be bought and sold.  

How To Invest In Cryptocurrencies?

Popularity of cryptocurrencies is gradually on the rise. But before investing in digital money, one should keep in mind the pros and cons and the potential risk factor. Due to its volatility, an investor may incur financial loss after investing in cryptocurrencies. Barring the caution note, a person who wants to invest in cryptocurrencies needs an online wallet as storage to keep his currencies. There are several exchanges in India which deal with digital currency. An online wallet can be purchased or a third party service provider can store your cryptocurrencies. The investor will have to transfer real money to buy cryptocurrencies.

How Many Types Of Cryptocurrencies Are There In India?

As of now, there are several types of cryptocurrencies operating in India. Some of the most popular crypto coins and tokens in India include Bitcoin, Ethereum, Tether, Shiba Inu, WazirX, Dogecoin, Tron, Cardano, etc. These are the relatively established and mostly traded crypto coins in the country. 

How Do Crypto Exchanges Function In India?

A crypto exchange plays an important role in enabling cryptocurrency trade and use. It serves as the entry point for normal money such as rupees to enter when buying crypto, and the exit point to redeem rupees when selling crypto coins. At present, Indian cryptocurrency investors have around 16 exchanges open for business, while more are ready to enter the Indian market.

List Of 16 Crypto Exchanges In India

Exchange 24h volume in US$

Binance                 35.04 billion

OKEx                     9.78 billion

Coinbase               7.43 billion

Kraken                  1.47 billion

Bitfinex                 1.04 billion

Bitstamp               432 million

WazirX                  275 million

CoinDCX               112 million

Zebpay                   36 million

Bitbns                   35.5 million

Giottus                  18.7 million

Unocoin                      192,000

CoinSwitch Kuber          N/A

Vauld                             N/A

BuyUCoin                      N/A

Coinmama                    N/A