Crypto Adoption in India: The 2024 Perspective

Crypto Craze in India, Youth Leads the Charge

Introduction

The world’s digital economy is growing rapidly and so is the debate around cryptocurrency in the corridors of India’s economy. The country is at a critical juncture of a major change, where a young and tech-savvy population is eager to embrace the new economy of cryptocurrencies, while the government is wary of the risks of a wild west of digital money. This paper finds that the course of crypto adoption in India presents a mixed bag of opportunities and risks as the country struggles to balance the twin objectives of fostering digital innovation and financial stability.

Cryptocurrency and India

The demographic structure of India is well suited to advance the use of cryptocurrencies. Given the fact that more than half of the Indian population falls in the under-25 age bracket and the increasing smartphone adoption, the consumers in India are inherently digital and hence, ripe for cryptocurrencies. Cryptocurrencies offer high returns, give people an option to the banking system, and a way to engage with technology. Cryptocurrencies such as Bitcoin and Ethereum are gradually seen as ways of saving and investing in addition to being mere technologies by the younger generation.

Crypto Adoption in India 

India’s stance on cryptocurrency has been rather inconsistent. Authorities have shifted from outright rejection of proposing concepts for total prohibition to cautious embrace with the introduction of a tax system on virtual digital assets in the 2022 budget. The RBI has expressed apprehensions that cryptocurrencies may jeopardize the conventional banking structure and cause economic risks. The allure of cryptocurrencies in India is multifaceted: they guarantee high rates of return, are an option to the conventional banking system, and are an opportunity to use technology.

Demographics

Between June 2023 and January 2024, there was a significant 300% increase in women in India engaging in Bitcoin or other cryptocurrency investments. This means that approximately one in five customers is female, most in the 18-to 34-year-old age bracket. A Mudrex survey conducted among 8,976 Indian participants found that 69% of respondents were male investors and 29% female, while 2% did not disclose their gender. Delhi-NCR topped the chart for leading crypto adoption in tier-1 cities, followed by Bengaluru, Mumbai, Hyderabad, Chennai, Pune, Lucknow, and Ahmedabad.

Revenue in the cryptocurrency market is anticipated to reach €318.5 million in 2024. The market is expected to exhibit a compound annual growth rate (CAGR) of 8.22% from 2024 to 2028, leading to a forecasted revenue total of €436.9 million by 2028. In 2024, the average revenue per user in this sector is estimated to be €1.2. On a global scale, the United States is projected to generate the highest revenue amounting to €21,540 million in 2024. The number of users in the cryptocurrency market is projected to reach 328.8 million by 2028, with user penetration rates increasing from 18.66% in 2024 to 22.04% by 2028.

Cryptocurrency Regulation and Legal Status Of India

Cryptocurrencies in India are currently unregulated; there is no legal body that governs their functioning as a means of payment. The Indian government proposed the Cryptocurrency Regulation Bill that seeks to prohibit the use of all cryptocurrencies and set the legal tender for the issuance of a CBDC by the RBI. This bill has not yet been enacted and remains a bill for consideration. The Supreme Court of India repealed the RBI circular of 2018 that banned banks from offering their services to individuals or companies indulged in the crypto trade thus, providing a fillip to the crypto industry in India.

India currently does not have any special laws for virtual currencies. Nonetheless, the rising use of crypto has been associated with different government statutes such as the Companies Act of 2013 that requires reporting of VDAs. The current income tax laws and the anti-money laundering laws have expanded their jurisdictions to cover virtual currencies as well. The central budget of 2022 proposed a 30% tax on profits arising from cryptocurrencies and a 1% tax on sources as the government acknowledged the economic consequences of the emerging virtual currency market.

Crypto Adoption in India is Fraught with Challenges

There are numerous obstacles that India faces on the way to crypto adoption. The first issue is the absence of legal imperatives that guide the operations of the sector; this is important since it often leads to ambiguity that hampers development. There is also a strong digital divide in the country—while many cities have high rates of tech savviness and technologization, many rural areas are far behind. The problem of cybersecurity persists as more and more people engage in the use of cryptocurrencies; consequently, the exposure to cyber threats also rises. Incidents that occurred in the global exchanges in the recent past have increased concerns about the safety of digital wallets and the stability of the crypto platforms.

Conclusion

Currently, India is aspiring to be a leader in the technological world. Therefore, the decisions made regarding cryptocurrencies will impact the country for the next few decades. It is on this premise that the digital aspirations of a youthful and eager generation will be matched with the realism of economic management and stability to unlock the full potential of crypto technologies while managing their risks.

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