Cryptocurrency in India: A Timeline of Growth, Setbacks, and Hope

The Evolution of Cryptocurrency in India: A Closer Look

Despite the uncertainty surrounding the future of cryptocurrency in India, the unregulated digital asset—particularly Bitcoin—has seen a remarkable rise in popularity since 2020. Data from domestic cryptocurrency exchanges suggest that between 1.5 to 2 crore Indians have ventured into this asset class, with investments crossing the $10 billion mark by November 2024. This growing interest signals a significant shift in the country’s investment landscape, which has traditionally favored gold and other stable assets. As India anticipates the Cryptocurrency and Regulation of Official Digital Currency Bill, let’s examine the journey of this virtual asset in the country.

2008: The Birth of Cryptocurrencies

The cryptocurrency in india  journey began in 2008 with the release of a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” authored by a mysterious figure known only as Satoshi Nakamoto. This paper laid the foundation for Bitcoin, the world’s first decentralized digital currency, and introduced blockchain technology to the world.

2010: First Transaction with Bitcoin

Two years after its inception, Bitcoin made its first significant mark when someone used 10,000 Bitcoins to purchase two pizzas. This event assigned a tangible value to cryptocurrency in india  for the first time and sparked the emergence of other digital assets, including Litecoin, Namecoin, and Swiftcoin, as the digital currency concept began gaining traction globally.

2013: The RBI’s Initial Warning on Cryptocurrencies

As  investments into cryptocurrency in India began to gain momentum  with platforms like Zebpay, Coinsecure, Koinex, Pocket Bits, and Unocoin emerging, the Reserve Bank of India (RBI) issued a warning in 2013. The central bank cautioned users about the security risks associated with virtual currencies, marking the first official statement on the matter from India’s financial regulators.

2016-2018: Demonetization and the RBI’s Crypto Banking Ban

The government’s demonetization initiative in 2016 inadvertently pushed more people toward digital payments and, by extension, cryptocurrencies. Tech-savvy individuals increasingly saw virtual assets as a promising investment option. However, in 2017, the RBI issued another cautionary note, expressing concerns over cryptocurrencies, and shortly after, the Ministry of Finance reiterated that virtual currencies were not recognized as legal tender in India.

In March 2018, the Central Board of Direct Taxes (CBDT) submitted a draft proposal to ban cryptocurrencies. By April, the RBI issued a directive to banks, non-banking financial companies (NBFCs), and payment service providers, forbidding them from facilitating transactions with cryptocurrency exchanges. This decision dealt a severe blow to the industry, causing a 99% drop in trading volumes across Indian exchanges.

November 2018: The #IndiaWantsCrypto Campaign

On November 1, 2018, ten years after Bitcoin’s creation, Nischal Shetty, the founder of WazirX, initiated the #IndiaWantsCrypto campaign to advocate for favorable cryptocurrency regulations. The campaign gained traction when it received backing from Rajeev Chandrashekhar, a member of the Rajya Sabha. Over time, the movement garnered support from various influential figures, including Unocoin’s Sathvik Vishwanath, Polygon’s Jaynti Kanani, investor Anthony Pompliano, and DJ Nikhil Chinapa. The campaign trended on Twitter during the 2021 budget session when the cryptocurrency bill was first announced. As of July 2021, the #IndiaWantsCrypto campaign had completed 1,000 days and continued to draw attention from crypto enthusiasts across the country.

March 2020: Supreme Court Overturns the Crypto Banking Ban

The RBI’s banking ban was a significant obstacle for cryptocurrency exchanges, prompting several to file petitions with the Supreme Court of India. In March 2020, the court ruled that the ban was unconstitutional, giving the industry a much-needed lifeline. This ruling came at an opportune time, as global interest in cryptocurrencies was surging, fueling a new wave of investments in India.

2021: The Proposed Crypto Bill and Regulatory Discussions

While the Supreme Court’s decision was a victory for the industry, the uncertainty surrounding cryptocurrency in India persisted. On January 29, 2021, the Indian government revealed plans to introduce a bill to establish a sovereign digital currency while imposing a blanket ban on private cryptocurrencies. However, as the year progressed, the tone shifted. In November 2021, the Standing Committee on Finance met with representatives from the Blockchain and Crypto Assets Council (BACC) and other key industry players. The discussions led to a consensus that cryptocurrencies should be regulated, not banned. Shortly after, in December 2021, Prime Minister Narendra Modi held a meeting with senior officials to further deliberate on the future of virtual currencies in India.

The Current Scenario and Outlook

Looking at recent developments, it seems increasingly likely that India will implement a regulatory framework to govern the use of cryptocurrencies. The question of which regulatory body will oversee this area remains unanswered, but there are strong indications that the government may classify cryptocurrencies as an asset class rather than as legal currency. Experts believe that regulations will enhance transparency, protect investors, and introduce checks and balances to prevent fraud and monitor cross-border transactions.

Despite the regulatory uncertainty, cryptocurrency adoption has continued to grow in India, making it one of the largest markets for digital assets. As India prepares to introduce its much-anticipated cryptocurrency bill, the path forward for virtual currencies in the country remains uncertain but highly anticipated.

Conclusion

The  journey of cryptocurrency  in India has been marked by both significant milestones and challenges. From the inception of Bitcoin in 2008 to the Supreme Court’s landmark ruling in 2020, the road to widespread adoption has been anything but smooth. However, the momentum gained over the past few years suggests that cryptocurrencies are here to stay. The impending regulatory framework will likely provide the necessary structure to bring more legitimacy and safety to the industry. It will be interesting to see how the story of cryptocurrencies unfolds in India, especially after the bill’s introduction.