2022

DECODING THE
INDIAN CRYTPO
MARKET
SUMMARY

The paper is all about the crypto currency and the

opportunity of crypto currency in India. India has recently
imposed a tax of 30% on the profit of crypto currency
trading and announced that the government will issue the Some important crypto
country's digital currency on block chain technology. The currencies
need for regulations and some regulatory suggestions are
depicted in the paper. Crypto currency has its own market BITCOIN

risks and volatility. I suggest that everyone enter the ETHEREUM

market with complete knowledge of the market and with TETHER

proper risk management.
POLKADOT

RIPPLE

CARDAQNO
INTORDUCTION

What is a crypto currency?

The usage of technology is becoming a vital part in

the life of a human being. Everything is available on a
single click. Here we are going to know more about a
technology and a digital currency that will be very much
prominent in the near future. In 2009, a programmer
named Satoshi Nakamoto mined the first crypto currency
named bitcoin and introduced it to the world economy.
Many experts say that it was introduced in order to reduce
the dominance of the US dollar in the world and to
introduce a universal currency. The creator Satoshi hasn't
revealed any of his identity to the real world and doesn't
know whether he is a single individual or a group. Like the
anomaly of crypto currency, he has also kept himself secret
from the whole world. Crypto currency is decentralized
digital currency which is used over the internet with the
help of block chain technology. It cannot be counterfeited
like the real-world currency. The word decentralized
means the crypto is not controlled by any company, EXCHANGES IN INDIA
government or by any third party. It completely runs
on the block chain in which it is developed. While BINANCE
compared to stocks, crypto currency is highly volatile
WAZIRX
in its price structure. It is easy to lose money as well
as gain money in a short period of time. The global COINDCX

market cap value of crypto currency is about 2.23 VAULD

trillion dollars till the date. There are more than 8000
COINSWITCH KUBER
crypto currencies in the market. Bitcoin is considered
as the major crypto and the price of all other crypto
depends upon the movement of bitcoin. A country
named EL Salvador has considered bitcoin as legal
tender, where people can use it as a payment option.
The Russian president has recently made a statement
that they are considering crypto as an important part
of technology and they will be thinking of executing
the mining of cryptos. The acceptance of crypto is
increasing in the world day by day mainly because of
the technology behind it. India is also moving
digitally and the government is trying to introduce
more technology to the citizens of the country.
Blockchain is one of the latest digital technologies
which makes human activities much easier. Hence
this revolutionary technology is supported by
cryptocurrencies mainly. Crypto currency also
promotes the concepts web 3.0, which is the next
generation internet focus on decentralization and
transparency. The introduction of web 3.0 enables
users more personal webbing experience and faster
service. All these concepts purely take place on
blockchain technology.

Block-chain technology It is a technology

where data is stored in interconnected blocks. Once
the data or the transaction details are completely filled in one block, the next block will be used
for more storing processes. Hence these blocks are interconnected, and tampering of these data
or blocks is impossible. If the tech finds some misleading activities the blocks will read
negative and no more activities will take place in that blockchain. This itself makes it more
secure and powerful. Hacking is considered as an impossible task in block-chain technology.
Because in order to hack the blockchain, we need supercomputers. Until this time no such
computers were discovered. Major concepts of block chain in the present world are Web 3.0
and metaverse. When we look into India, the CBSE uses this same blockchain technology in
order to store the certificates in a distributed manner at different locations which have different
stakeholders in order to protect it against any kind of tampering.

India and crypto currency

The Supreme court of India on March 4 2020, revoked the RBI ban on crypto
currency trading. The crypto analysts said that the supreme court has made a revolutionary
judgement for the economy and growing technology. After the judgement, the crypto market
in India got a high boom and many exchanges took birth in the country in order to enable crypto
trading. Presently Indians own crypto assets worth 5.3 billion dollars. It is an unexpected
increase after the supreme court judgement. Now the Reserve bank of India pointed out the
concern about this market stating that it may destroy the economy due to its volatility and
anonymity. Transactions are kept hidden which results in large hawala dealings and illegal
activities. The Reserve Bank of India has clearly pointed out this concern. But the technology
is very much transparent and with the help of the exchanges the government can track these
transactions. Unlike stock market, the crypto market is live 24*7. Firstly, the government of
India was much confused in the acceptance of crypto currencies and its legislation. Later the
government also started to adopt more digital concepts. As a result, a tableau of metaverse was
introduced in the republic day parade which is a positive outlook on this tech. Metaverse is a
concept which combines multiple virtual places where people around the world can come
together in a platform and act like they are really together. The government of India is very
much interested in the digital India concept. In the recent budget session, the Hon’ble finance
minister introduced many digital concepts, where one of the idea was that the central bank will
introduce a digital coin in block chain technology without any volatility or price fluctuation.
The FM also states that this digital currency will be the only legal tender and the other cryptos
will not be considered as a legal tender. But this doesn’t mean that other crypto currencies are
illegal but they cannot be used as payment options but can be treated as an asset. India also has
imposed a 30% TAX on the profit of cryptocurrency trading, but the government has not issued
much details about the same. The country is still very much concerned about the usage of the
crypto currencies mainly because of its price action and anomaly. But the crypto experts say
that banks are afraid of these crypto currencies because they will lose their role in the finance
sectors because blockchain doesn’t require a third party, and this is the main concern raised by
the central banks around the world. Till date the government of India didn’t introduce their full
outlook on cryptocurrency and trading.

CBDC (Central Banks Digital Currency)

Central bank is the central pillar of the financial system of the country. In India, the Reserve
Bank plays this role. The RBI controls the payment systems and issue of currency in the
country. Recently technological advancement has made the central bank look forward and
move with growing technology. As a result, RBI announced its digital currency which will be

treated as legal tender which is the same as fiat currency. CBDC works on block chain
technology. CBDC is not like other cryptocurrencies in nature, it will be non-volatile or a stable
currency. CBDC is the same as currency issued by the central bank but it is not in the paper
form and in electronic form. It can be exchanged to other fiat currency easily and it enables
transactions easier and faster.

MORE ABOUT INDIA

India has become one of the biggest markets for Asia in recent years. Many exchanges like
wazirx, coindcx, vauld have sprouted in India. Around 20 million people in India are estimated
to use crypto cryptocurrencies. Bitcoin saw an average return on investment of 66% in
November and — along with cryptocurrencies Mana, Dogecoin and Ethereum — traded the
most in volume during the festive season of Diwali in early November. Film and cricket stars
have also endorsed homegrown crypto exchanges by fronting advertising campaigns for
platforms like Coin Switch Kuber and CoinDCX, both of which have upped their social media
campaigns. Indians are set to invest more than $10 billion in the cryptocurrency market by
2030, according to a report by trade association NASSCOM. This rapid welcoming of crypto
by Indians made the central bank very much concerned about the stability of the country's
economy. But critics say that the central bank is worried about their own stability because
crypto is decentralized in nature which will reduce the upper hand of the central bank in the
financial sector. But there is a risk of loss of money in crypto trading due to its volatility.
Trading without knowledge will result in loss of money.

NEED FOR REGULATION OF CRYPTO IN INDIA

However, the country is not yet to capitalize on this opportunity. Indian companies have
received less investment in block technology. This is because not much legal framework is
done in the case of crypto currencies. Imposing a 30% tax on crypto currency doesn’t mean
that the crypto is legal in India. The government has to introduce a proper guideline on crypto
currency. A complete blanket ban will not be efficient in the case of crypto currencies because
it is decentralized. Anybody can transfer their cryptos to other wallets by blockchain and
nobody will be able to access it without the private key. So rather than banning it, regulations
will make the crypto market more friendly and safer. Innovations blend with the internet will
have risks but a proper regulatory framework can mitigate it and the society can accept and
have a ride in the latest technologies.

SOME BEST PRACTICES ON CRYPTO CURRENCIES

Recently some countries had made the crypto currencies legal and allowed the citizens to trade
cryptocurrency under some legal obligations. Let's go through some of those countries.

EL-Salvador- The President Nayib Bukele passed a law with parliamentary majority in June
2020 stating that all economic agents must accept bitcoin as a form of payment when it's offered
by a person who acquires a good or service. This was a revolutionary decision for the growth
of crypto. It is the first country to accept bitcoin as a legal country. Now the country is planning
to set up a bitcoin city. According to Bukele, the residents of Bitcoin city won’t have to pay
any income, property, capital gains or even payroll taxes. The city would be built with attracting
foreign investment in mind.
USA- Several states in US have proposed or passed laws affecting crypto currencies, states
passes favorable approach to crypto currencies, the mayor of Miami expressed his intention to
promote Bitcoins in the city by offering municipal workers the option of receiving all or a part
of their pay in Bitcoin, and allowing residents to pay city fees and property taxes in the
currency. The sale of crypto currency is generally regulated under state or federal law and is
subjected to the Commodity Exchange act. The SEC regulates the authority over the issuance
or resale of any token or other digital asset that constitutes a security.

Ukraine- Due to the invasion of Russia over Ukraine, the Ukraine government has passed a
law accepting bitcoin and other cryptocurrency during the war time. The country published its
bitcoin, Ethereum, usdt wallet address to the public to receive donations. Ukraine received
millions through the crypto donation. Crypto transactions are transparent and can track the
transactions. The legalization of crypto enabled Ukraine to enable faster transactions and
receive the donations faster.

Singapore-The payment service Act of 2020 regulates the traditional and crypto payments in
a single piece of legislation. All the exchanges in Singapore need to get a license from the
Monetary Authority of Singapore (MAS).

China- the country has banned the complete trading and mining of cryptocurrencies. In March
2020, the news of Chinese ban affected the world crypto market to a huge dumb. Countries
have now criminalized the mining and trading of crypto. Many big exchanges like Binance
Kucoin have stopped their service in China.

SOME REGULATORY SOLUTIONS FOR INDIA

Till time India had not made many statements in crypto trading and the RBI is still opposing
the technology even though it is going to introduce its own CBDC. The recent statement of the
financial minister “imposing a tax doesn’t mean crypto is legal '' has made the investors and
traders very much confused. Below I point out some policy reforms and suggestions as
solutions for regulations of crypto currency.

Crypto as an asset first: The government can issue a law stating that people can invest in
crypto currencies rather than gambling it as price fluctuates on a day-to-day basis. The
government can encourage people in investing their amount rather than doing aggressive
trading. This will make more people come to market and find more investment opportunities.
People will study the market and do positive trading.

Traceability: The main concept of crypto is anomaly, it can easily be rectified by directing the
exchanges to make KYC (know your customer) mandatory. All the transactions can be traced
by the exchanges and can be forwarded to the government, this will reduce the money
laundering channel. KYC at the entry and exit points where crypto is purchased from exchanges
ensures that there is always traceability and accountability on those who buy and sell crypto
assets.

Enhance trading knowledge: The SEBI should conduct necessary steps to increase the
knowledge of investors on market risk of crypto. Webinars and seminars can be conducted by
technical and fundamental analysts under the guidance of SEBI which make people clearer
about the market and gets an idea about the risk they are going to bear.

Restrict the number of trades: The government should guide the exchanges to limit the
trading numbers on the basis of the experience and their trading portfolios. This will ensure a
proper risk management of the money. Most people lose their money in crypto currency
because of over-trading and revenge trading. If trading and investment regulation comes at
least during the early stages, it will make the people study in depth about the condition of the
market.

CONCLUSION

Crypto currencies represent a transformational shift in technology globally. Some people are
degrading the crypto market like we saw in the case of the internet before. But the internet
changed the whole working of the world. The same will happen in the case of cryptocurrencies
as well. This is the early nurturing stage of crypto currency and countries like India have a
tremendous opportunity in entering the market. Rather than enforcing high taxes and blanket
bans the country can bring regulations on threats of frauds and money laundering. Bank of
meme coins can be entertained this will make the market more professional. The crypto
currencies offer tremendous benefits in donations and fundraising events because of its
transparency. India should look to capitalize on the ground-breaking potential of this
technology to advance its global position as an IT power. The technology and the asset are the
future and more people will come to it eventually. The government has introduced the UPI
payment before which made a revolutionary change in the whole financial market and I hope
there will be a positive response to blockchain technology and cryptocurrencies from the
government.