CRYPTOCURRENCY BAN LIFTED IN INDIA

Cryptocurrencies have gained popularity across the world.

Facebook revives Libra plans; Value of global crypto market to reach US$1.6 trillion

While the Facebook is re-thinking its plan to launch digital currency Libra, India’s highest court has lifted a ban on cryptocurrency today.

India’s Supreme Court on Wednesday allowed trading in virtual currency, cryptocurrency and the likes of Bitcoin. However, the court’s decision might be over-shadowed by the upcoming bill proposed by India’s federal government.

The draft bill seeks to prohibit mining, holding, selling, trade, issuance, disposal or use of cryptocurrency in India, and the violation could result in hefty fines and imprisonment of 10 years.

For now, the supporters of cryptocurrency may rejoice as the draft bill might come in a distant future and may be toned down a tad bit after Supreme Court’s decision.

The court ruled in favor of the Internet and Mobile Association of India, which was representing the interests of cryptocurrency. 

India’s central bank, Reserve Bank of India (RBI), banned trading in cryptocurrency in its circular dated April 6, 2018. The RBI’s decision to ban cryptocurrency was challenged in the court and the decision could not have come at a better time, when investors are looking for alternative financial instruments.

Citing risks of fraud and the complex nature of digital currencies, the RBI in its 2018 order asked all banks and financial institutions in India to stop their cryptocurrency services.

Defending its case, the RBI argued that the digital currencies would undermine the country’s banking system, but it seems India’s Supreme Court is more future-ready than the country’s central bank.

As 191 million Indians above the age of 15 remain un-banked, the lifting of ban on cryptocurrency is good news. The United States and China have witnessed an influx of Blockchain startups and an increase in the usage of digital currencies. India, on the other hand, was held back by its own central bank for about two years.

Supreme Court of India, New Delhi

After the Supreme Court’s decision, 1.3 billion Indians have an option of a new asset class, which is vital for the growth of digital economy as some of the sectors that are likely to benefit the most are financial services, retail, SMEs and blockchain.

Analysts have stressed that for the cryptocurrencies to thrive in India, regulators such as RBI and Securities and Exchange Bureau of India (SEBI), among others, have to devise a strong legal framework that would help digital currency ecosystem to grow and also protect investors from fraud.

Turning to Facebook’s Libra, media reports suggest that the social network's digital wallet is now expected to launch this autumn, several months later than initially planned.

The Libra Association, which Facebook founded to create the currency, will continue its work, the reports said.

Facebook’s partners in the Libra Association include Lyft, Spotify, Shopify, but several other high-profile members such as Visa left after the idea was criticized by authorities, said reports.

According to a research report published by Azoth Analytics in August 2019, the global cryptocurrency market was valued at US$856.36 billion in the year 2018. Key factors facilitating high demand of cryptocurrencies include high remittances in developed countries, increasing fluctuation in monetary regulations, and growth in venture capital investments coupled rising awareness among the investors especially in emerging nations. According to the research report, global cryptocurrency market is projected to display robust growth represented by a CAGR of 11.9% during 2019-2024 reaching the value US$1.68 trillion.

Bitcoin currency holds the major share in the market owing to the growing awareness among Asian investors coupled with availability of larger returns is proliferating the market growth, said the report. Moreover, growing usage of alternative currencies such as Ethereum, Ripple and Bitcoin Cash due to their captivating features and models has been major factors backing the growth in the industry.

Amongst the regions, Europe accounts for the largest regional share in the global cryptocurrency market. Key factors driving the robust growth rate in European region include presence of enormous consumer base, and legalization of cryptocurrencies as a medium of exchange in many countries coupled with growing internet penetration, supplementing the market growth of cryptocurrencies in the region.

Below is the evolution and the workings of a cryptocurrency ecosystem explained through infographics by Visual Capitalist. Visit the website here.