In India, the crypto currency market has been filled with confusion over regulations that managed to stifle the growth of the industry to an extent. But, much to the relief of the crypto community in India, it looks like things are finally falling back into place as PayPal announced that its users can now buy, hold and sell crypto currency through their PayPal accounts.
Let’s look at how the market reached where it is today. In 2018, the Reserve Bank of India imposed a ban prohibiting financial institutions from dealing in virtual currencies and rendering services to crypto businesses. At the same time, the value of Bitcoin, the largest crypto currency by market cap, dipped by more than $15,000 (Rs. 11,18,000) during what’s referred to as the “crypto winter”, which only exacerbated the situation.
Several crypto exchanges in India suffered due to these reasons and ended up shutting down. However, this did not seem to affect the ardent supporters who fought tirelessly to revive the Indian crypto ecosystem.
In March 2020, there was a glimmer of hope, as the Supreme Court quashed all banking restrictions imposed by the RBI. This was followed by several events such as the Bitcoin Halving which turned out to be fruitful for the Indian crypto market. Then, businesses started considering crypto as an enticing store of value and hopped on to the bandwagon. Then, PayPal on October 21 introduced its Crypto Currencies Hub.
Notably, PayPal is not the first company which has endorsed crypto for payments. But it is certainly one of the most important ones to do that considering its wide user base – 346 million active accounts across the world.
The pivotal SC ruling has also had an impact on the country’s traditional banking system which has slowly started to pave its way into the crypto sector. Recently, a London-based crypto firm, Cashaa, announced a joint venture with The United Multistate Credit Co. Operative Society to offer crypto financial services apart from the traditional banking services at 22 locations in India. “While crypto currencies like Bitcoin and Ethereum might not be the one-size-fits-all panacea that the current financial system needs, they are most certainly an inevitable evolution in what money can be. Future proof institutions/organisations/governments will proactively take advantage of this inevitably shifting tectonic plate that is changing the mechanisms by which value changes hands between its most important constituents — the people. The ones that do not, will miss the boat,” said Ram N, a crypto evangelist and First Principles Ventures’ CEO.
Other signs of a crypto boom were reflected when investments from international players started flowing into the Indian crypto economy. While some international crypto exchanges began expanding operations in the country, others invested in the country’s indigenous crypto exchanges like WazirX to leverage the increasing hype amongst Indian users.
However, even as the sector continues to see rapid development, the decentralised nature of Bitcoin is a cause of worry for several lawmakers who believe that it can be used to facilitate illicit activities such as money laundering. But, centralisation can lead to tinkering of money supply and increase corruption.
These virtual currencies are here to stay. Also, the Supreme Court ruling seems like an opportunity for policy makers to take a progressive stance towards this sector and make the most of the fintech revolution.