2021 has remained an eventful year for crypto in India. In the past year, the crypto industry witnessed Bitcoin hitting several new all-time high prices and major institutional buy-ins from mainstream companies. Crypto is now also a part of pop culture, with Elon Musk becoming perhaps its most famous face. India has moved one step closer to a positive regulatory environment around its crypto markets, and the broader Indian populace’s interest in crypto seems to have skyrocketed.
Developments in the Year 2021
Since the RBI lifted the crypto ban back in March 2020, Indian crypto exchanges have noted a surge in user registrations and daily trading volumes, and this influx continued in 2021. WazirX now serves a user base of over 10 million that traded over $43 billion in 2021 (up by 1735 per cent since 2020).
Case in point, despite the initial lack of clarity regarding crypto regulation in India and the price volatility cryptos have witnessed in the last few months, India rose to have the second highest crypto adoption rate in the world, only behind Vietnam.
Among other developments for crypto in the past year, Bitcoin, which remains the top crypto based on the market cap in 2021, gained over 50 per cent since the beginning of the year.
As for the legal status of crypto in India, while a bill banning ‘private cryptocurrencies’ was to be introduced in the Budget session of Parliament back in the February of 2021, that bill did not end up getting tabled. However, now the Indian government is slated to introduce ‘The Cryptocurrency and Regulation of Official Digital Currency Bill 2021’ in Parliament during the Winter Session currently in process. And all indications are that it’ll bring in much-needed positive regulations.
Finance minister Nirmala Sitharaman has recently stated that a new crypto bill is going to be brought up in the House after approval from the Cabinet. This bill is expected to positively regulate the crypto markets in India, and permit crypto investments and trades with reasonable restrictions for aspects like risk management and investor protection.
Meanwhile, as a NASSCOM-backed study on the “CryptoTech Industry in India; suggests, more than 230 Indian start-ups are already operating within the CryptoTech space, with backing from over 15 million retail investors. With India reportedly close to getting its very own CBDC (central bank digital currency), CBDC, Bitcoin, smart contracts, DeFi or decentralized finance, tokenization, the constant rise of CryptoTech capital, and NFTs seem to be the seven key factors driving the growth of CryptoTech in India.
As the study further states, the crypto market in India is expected to develop doubly faster and reach up to $241 million by 2030. What’s more, the Indian crypto market has the potential to generate an economic value addition of $184 billion in investments and cost savings, and it stands to create over eight lakh jobs by 2030.
Expected Trends in the Year 2022
In the year 2022, we expect to see more solutions coming up that will make
decentralised blockchains cheaper, faster, scalable and sustainable. But perhaps more interesting are some of the trends that often go unnoticed. For example, while Bitcoin dominance may be reducing and prompting many projections (in all directions) from industry experts, did you know that Bitcoin’s dominance in trading volume is steadily declining too? More of the market is interested in quality projects such as Ethereum, Solana etc than ever before.
As we continue to see increasing interest in the space, we are also going to see the regulatory clarity we have always wanted. India's Prime Minister himself now calls for crypto regulation, and we expect decisive, positive action on this front in 2022.
This should be followed by growing institutional adoption – which is already at
exceedingly high levels in the West, in the industry's lifetime so far. Indian institutions are expected to quickly follow suit.
And that will likely lead to perhaps the biggest trend to watch out for in 2022 – the growth of the metaverse – the digital realm that made its presence emphatically felt this year. Expect more of us to spend time in the metaverse, creating NFTs, working on DeFi, and playing on GameFi platforms.
In other words, after a spectacular year, expect crypto to retain its label of the most vibrant, lucrative, and innovative sector to be in India in 2022. I believe we can say this for all stakeholders – established brands, new projects, consumers, and even the government!
Nischal Shetty is the founder of WazirX. The views expressed in this article are those of the author and do not represent the stand of this publication.