The modern times and the sway in legal opinion has made the time ripe for the emergence of cryptocurrencies in India. As per the results of a survey conducted by Paxful, a peer-to-peer Bitcoin marketplace, 3 out of 4 people who have some understanding of virtual currencies, have invested into it. Before 2018, the cryptocurrency market in India was adding up to 3, 00,000 new customers every month. However, with the decision of Reserve Bank of India in 2018, to temporarily ban the cryptocurrencies and their trading in India for two years, this growth figure plummeted. However, in spite of the harsh government stance on Cryptocurrency the growth figures haven’t completely declined.

With the recent Supreme Court judgment overruling the ban, the sandboxing period of the cryptocurrency market in India has come to an official end. This has been seen as a welcome move by many cryptocurrency investment enthusiasts. The main reason behind this great enthusiasm to invest in this is attributed to the financial freedom that such investment provides. This is largely reflected in the Indian people opinion regarding the regulation of cryptocurrencies, where 75% of the respondents are against government intervention in the field of virtual currencies. They however advocate the usage of basic Know Your Customer procedure for providing legitimacy to cryptocurrency based transactions. However, the Indian market demand is not just limited to this aspect.

The Indian Market is witnessing all time highest unemployment rates. The ever rising rates have beaten the previous 45 years of unemployment rate records. With this the sword of further deterioration looms on the head of employees in Indian Market. Thus, the Indians are welcoming these cryptocurrencies with the aim that not only will they provide financial security and stability but also will help us in boosting the employment rates in Indian Market. The trend in investment is changing too. People are seen to lean towards investing in cryptocurrency and this recorded percentage is higher than what has been ever recorded. This can signal towards the return of certain companies like Zebpay, which had to retract from the Indian market after the Reserve Bank of India guidelines, making any trading activity in cryptocurrency illegal. All this is bound to take off investment from the traditional markets, which would lead to an economic slump in the start. But with the passage of time, the market would distribute the resources and would stabilize in the longer run, but indeed the short term effects would look drastic.

The point about cryptocurrency is that the guidelines regulating it are still very foggy and nothing can be construed about its future. Though the government is trying to promote its usage, the stance of government is not clear. The policies are aimed at promoting it, but the regulations are very restrictive which makes it extremely hard to adopt. The whole issue boils up to one single point: Is it safe to invest in Cryptocurrency at this point of time? It’s hard to comment with the limited information we have, but analyzing the current trends we can indeed say- Yes. With reports and statements of RBI pointing towards launch of a cryptocurrency by RBI, it is indeed clear that no situation of ban is possible in the near future. However, this would again force you to raise brows as to why RBI is introducing a cryptocurrency of its own?

As reported earlier, India along with other BRICS countries are mulling to introduce their own common cryptocurrency to counter US Dollars and US based companies. Though there is no official confirmation in this regard. However, for the last two years, there has been a buzz about India, China and Russia developing their own fiat cryptocurrencies, to emerge as pioneers in the global market. While Dubai, Venezuela, and few other countries have already made their plans official, India’s crypto plans and developments have rather been on a slow track. The Reserve Bank of India said that it is seriously thinking about developing a sovereign digital currency in the country and will be releasing it appropriately when the system and time is right. However, the RBI’s stance on the ban of private cryptocurrency still remains foggy and unclear. The current governor of Reserve Bank of India Shaktikanta Das said that the cryptocurrency issuance is a sovereign mandate and will not be handed over to a private company, as there is a huge challenge around money laundering, and this is the reason why RBI put the ban on it for the first time. Das also was of the opinion that the technology is still in the nascent stage at the moment, and it will take time to launch the cryptocurrency into the global competitive market. “It’s too early,” he added.

The present stance of Indian market is very confusing. At one hand we have the high perspectives of getting better employment, financial security, financial advancement, etc. and on the other we have the odds of losing all in this great gamble of ours. However, one fact cannot be denied that cryptocurrencies are indeed the future of transactions on global scale. But what needs to be associated with this fact is the sheer risk it poses to the stability of an economy. We have seen the value of cryptocurrencies skyrocketing at once and then plummeting the very next minute. The market for cryptocurrency is still very nascent and it shall be a misjudgment to make any comment with the limited amount of information in the public domain. So, the best we can do is wait and analyze the situation, and then take any further action. For what we need to understand is that on one side, if utilized properly Cryptocurrencies can be Boon to the economy, but on the other side any mal-implementation can have disastrous consequences too.

Sonam Chandwani is the Managing Partner at KS Legal & associates and heads the firm’s Corporate Litigation Practice.