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India’s Bitcoin Binge Sees Govt Plan Regulations for Digital Currencies

Last Updated March 4, 2021 4:57 PM
Benjamin Vitáris
Last Updated March 4, 2021 4:57 PM

Currently, there is a growing interest in bitcoin in India. However, not just only tech savvy, young people or citizens who are not trusting in the national currency are investing in the cryptocurrency, but also the government and tech giants.

In April, the Department of Economic Affairs in the Ministry of Finance in India formed an interdisciplinary committee including members, such as the central bank of the country, to examine the framework surrounding cryptocurrencies like bitcoin. The committee is expected to share its findings in July.

In addition, the Indian government launched a discussion on its forum MyGov to seek public opinion on cryptocurrencies. This move shows that the government seeks to understand how bitcoin works and is willing to use the available resources to develop frameworks. Both bitcoin investors and companies welcome the efforts of the Indian government. The discussion will allow all parties to address concerns over the security and risks associated with the use of the cryptocurrency, and will eventually work towards improving the infrastructure of bitcoin.

By analyzing the topics in the discussion, the most of the participants expressed their interest in seeing bitcoin as a major player in the financial and trading systems in India. However, on the other hand, many had expressed concerns over the reliability of the cryptocurrency since there had been some incidents connected to money-laundering.

In conversation with Forbes , Hesham Rehman, CEO and co-founder of Bitxoxo, understands the concerns but urges that “there is nothing corrupt about cryptocurrencies—they enable direct transactions with no third-party intervention.”

Despite the current concerns, the number of bitcoin investors is rising in India. Multiple firms reported there were approximately 600,000 bitcoin users in India last November. The cryptocurrency companies in India seek to grow their customer base by proving that their platform is secure and trustworthy. The firms often request documents, including government issued ID and Permanent Account Number (PAN), to improve the security at the platforms.

“These are expensive but necessary steps. By improving our infrastructure, current customers are assuaged and future customers are confident,” Benson Samuel, chief technology officer (CTO) and founder of Coinsecure said.

Companies in India formed Digital Assets and Blockchain Foundation India (DABFI) to educate the citizens of the country about the cryptocurrency and to propagate best industry practices for businesses. Rashmit Gupta, whose company SearchTrade is a founding member of DABFI, said that the foundation aims “to create more confidence among the public to use Bitcoin, and eventually increase the use of digital tokens more effectively.”

Until 2013, bitcoin was not so popular in India. The current scene looks like this: bitcoin has a fast-growing customer base along with a rising investor confidence.

“Some financial investors are rightfully cautious about investing in this space due to lack of regulatory clarity. But, the government is working with private players to sketch regulatory frameworks that boost innovation as well as ensure the safety of the platforms,” stated Arpit Agarwal, principal at the Mumbai-based Blume Ventures.

Bitcoin’s future seems to be promising in India. If the government provides adequate frameworks, service providers are expected to expand the scope of usage. Currently, the cryptocurrency is used to conduct purchases in mobile applications and to buy gift vouchers. However, in the future, companies are planning to implement bitcoin to the financial sector of India, offering solutions to the country’s unbanked population,