India delays cryptocurrency regulation bill as industry enters window period

India, with a population of 1.4 billion, is becoming the fastest growing cryptocurrency market, with more than 20 million cryptocurrency holders waiting for the implementation of relevant regulatory policies in the country.

Regulatory uncertainty is increasing, and the "Cryptocurrency and Official Digital Currency Regulation Bill 2021", which was originally scheduled to be submitted in the winter session of the Indian Parliament in December, has been delayed. The bill proposes to ban all private cryptocurrencies in India. Local media quoted people familiar with the matter as saying that the government is still finalizing the details of the legislation and the cabinet has not yet approved the proposed legislation.

The delay in policy formulation has brought a window of opportunity for the development of India's crypto industry. Whether it is the demand and scale of the crypto asset market or the attractiveness of the crypto industry to talents, India has entered a period of rapid growth. Reports show that from January 2018 to December 2020, the trading volume from Indian cryptocurrency exchanges accounted for 5% of the global total trading volume.

In the view of observers, after China's comprehensive ban on cryptocurrencies, if India's crypto industry can obtain regulatory norms and guidance, it is very likely to become the center of the crypto industry in Asia.

India delays cryptocurrency policy

India's "Cryptocurrency and Official Digital Currency Regulation Bill, 2021" is likely to be postponed. According to Indian media reports, the government is considering amending the proposed bill. People familiar with the matter told the media that the government has not yet finalized the details of the legislation.

The bill, which has been in the works for more than a year and was originally scheduled to be submitted in the winter session of the Indian Parliament, which began on November 29, aims to ban all private cryptocurrencies in India in order to promote the official digital currency issued by the Reserve Bank of India (RBI). The winter session of Parliament, which ended on December 23, has not yet discussed the bill, and the cabinet has not yet approved the proposed legislation.

The schedule for the last week of the parliamentary session has removed the cryptocurrency bill from the list of business on its website. However, the government can still introduce legislation by ordinance during the parliamentary recess. The delay is reportedly due to the Indian government's belief that "the evolving global cryptocurrency regulation requires broader consultation."

The delay in the bill also provides a window of opportunity for the growth of India’s crypto industry and cryptocurrency market.

India, with a population of nearly 1.4 billion, is one of the fastest growing cryptocurrency markets in the world. According to data, India has more than 20 million cryptocurrency account holders, which has surpassed the stock market, with a total of 6 billion rupees (equivalent to 79.14 million U.S. dollars) invested in cryptocurrencies. Among the 20 million cryptocurrency holders, the average age of investors is around 25 years old, and most investors are between 25 and 34 years old.

A report by Crebaco and Khaitan & Co shows that cryptocurrencies, especially Bitcoin and Ethereum, are becoming increasingly popular in India. The report believes that India's crypto industry is worth $15 billion, and from January 2018 to December 2020, India's cryptocurrency traffic exchanges accounted for 5% of the global total trading volume.

Over the past decade, India’s interest in cryptocurrencies has been growing, and the demand has spawned several crypto asset exchanges such as CoinDCX or WazirX. CoinDCX was recently valued at $1.1 billion after a funding round.

Regulatory changes for crypto assets in India

The explosive growth of the market and the emergence of related companies have long worried regulators, and the Reserve Bank of India has been expressing that cryptocurrencies pose a threat to financial stability and the country's macroeconomics.

While the government appears to be leaning toward regulation over a ban, the Reserve Bank of India (RBI) has not changed its stance. According to The Economic Times, the RBI reiterated in a detailed presentation to its central committee on Dec. 17 that “a complete ban is necessary.” While the RBI did not reveal details of the presentation, it said that “various aspects of central bank digital currencies (CBDCs) and private cryptocurrencies” were discussed.

The RBI cited the Reserve Bank of India’s foreign exchange management and regulatory challenges for offshore virtual assets as reasons for seeking a complete ban, implying that the anonymity of crypto asset transactions is a matter of great concern to the RBI.

Experts observing the cryptocurrency industry in India say that as of now, investing in cryptocurrencies in India is a huge risk unless the government takes a clear stand on the issue. However, in the future, once regulations are in place and cryptocurrencies become legal with proper guidance, trading will become freer for investors, especially young people.

Internet people flock to India's crypto industry

India is one of the fastest growing cryptocurrency markets in the world. A report by blockchain data platform Chainanalysis shows that from January to June this year, the country's cryptocurrency market size increased by 641% in half a year. In the past few months, Indian cryptocurrency exchanges CoinSwitch Kuber and CoinDCX have become unicorn companies.

Take CoinSwitch Kuber, for example, India’s leading cryptocurrency exchange, which has grown from 25 employees to more than 380 in the past year and a half. Indian Internet industry practitioners are entering the company, including former WhatsApp executive Ashish Chandra (general counsel), former Paytm executive Krishna Hegde (senior vice president of new initiatives), former Flipkart executive Jayram Krishnan (vice president of products) and other Internet executives.

In an interview with The Economic Times, a headhunting company reported that the 25 to 30 exchanges operating in India have witnessed the demand for talent in the crypto industry in functional departments such as technology, compliance, law, risk management, marketing and sales. Due to recent changes in India's regulatory policies on the crypto industry, talent demand is also moving towards "managing projects, introducing stricter regulations and more government supervision."

Managers of cryptocurrency exchanges and headhunters said that there are two attitudes in the recruitment process - some talents interested in the crypto industry are still skeptical about the industry due to regulatory uncertainties; others know that they want to join cryptocurrency companies because they believe it is a track that can make money quickly.

“Although the talent pool for cryptocurrency and blockchain in India is growing, it is still scarce, which is one of the reasons why we have to offer high salaries ranging from 150,000 to 700,000 rupees (equivalent to $1,977 to $9,226) per month to technicians,” Praveenkumar Vijayakumar, chairman of Malaysia-based cryptocurrency trading platform Belfrics Global, said in an interview. “As exchanges operate and enterprises adopt blockchain, the demand for blockchain talent will become more competitive.”

Industry trackers say that in most cases, the average salary offered by exchanges is around 200,000 rupees ($2,636) a month for technicians with two to four years of experience.

The development of the crypto asset market and crypto industry in India

In India, the digital skills market is already very strong, with both traditional companies and emerging blockchain companies hiring technical experts at record levels and with the highest salaries ever. Media reports say that professionals with encryption and Web3 skills are paid 10-30% more than professionals with the same years of work experience. Consulting firm Transsearch said, "India will become the world's largest cryptocurrency market, and this industry will be hot for a long time."

In this development situation, Himanshu Sharma, who works in the consulting industry, wrote that India needs to regulate cryptocurrencies, but it does not need to follow China's path of a complete ban. It can learn from global markets such as the United Kingdom and Singapore, where cryptocurrencies are not legal tender but are regarded as property that must comply with the requirements of financial regulators.

In the view of observers, if India's crypto industry can obtain regulatory norms and guidance, it is likely to replace China as the market center of the crypto industry in Asia.