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Can the Bitcoin surge push India to overcome its cryptocurrency hurdles?

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Can the Bitcoin surge push India to overcome its cryptocurrency hurdles?

The recent remarkable surge in Bitcoin prices has sparked a pertinent query among Bitcoin investors: Will this trend change the fortunes of Indian cryptocurrency firms?

The nation’s cryptocurrency exchanges are witnessing a substantial burst in demand, driven by the recent skyrocketing of Bitcoin prices to unprecedented highs.

The Indian cryptocurrency platform CoinDCX, for instance, has reported a significant five-fold increase in trading volumes over the past month.

“Specifically, our spot trading volume, which began around $5 million at the beginning of February, rose to approximately $25 million by February 28,” says Sumit Gupta, co-founder of CoinDCX.

“The recent surge in Bitcoin’s value has undeniably ignited a wave of enthusiasm and confidence.”

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Meanwhile, India’s largest cryptocurrency exchange, WazirX, which is based in Mumbai, is also experiencing significant growth in cryptocurrency transactions.

“My servers are humming at overcapacity,” says Rajagopal Menon, vice president, WazirX, which has experienced a 20-fold increase in trading volumes since the beginning of the year.

“My new users are up, my daily traffic is up. So, the long and short of it is that it is a function of sentiment – the moment price goes up, it’s herd mentality and everyone wants to buy. So, we are definitely seeing an uptick in people wanting to buy their favourite crypto.”

Tax burden

Despite the rise in investor interest, volumes are still down from their peaks as crypto exchanges are burdened by heavy taxes imposed by the country.

In 2022, India imposed a 30 per cent tax on profits from cryptocurrencies, as well as a 1 per cent tax on all transactions of the virtual assets.

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While “there is no dearth of people” wanting to invest in cryptocurrencies, Mr Menon says, that “retail investments have not reached the peak that we saw in 2021”.

This development coincides with the growing apprehensions expressed by Indian authorities regarding cryptocurrency trading. The risks associated with it, coupled with fears of potential misuse for illicit activities like money laundering, have raised concerns.

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There’s also a worry that it could pose a threat to the stability of the nation’s financial system.

These concerns resonate with numerous nations worldwide, including India. The Indian authorities are indeed wrestling with the challenge of how to regulate these assets, especially considering their sustained popularity.

Bitcoin, the largest cryptocurrency, has risen by almost 54 per cent year-to-date to over $68,000 as of Friday evening. This was lower than the new all-time high it reached on Thursday of $73,803, which dived further down to about $65,000 on Sunday.

The rise of Bitcoin has been driven by various factors, such as inflows into US spot exchange-traded crypto products and the expectation of global interest rates falling. This often leads traders to redirect capital into risky assets.

Investor interest in cryptocurrencies has grown following the approval of 11 spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission in late January.

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The Bitcoin “halving” event is anticipated to occur in April, resulting in a reduction in the rate at which new coins are generated. Historically, these events have led to an increase in the value of the cryptocurrency.

Indian exchanges are pleased to witness a resurgence in investor demand, after a challenging period for the sector.

“We’ve witnessed a remarkable 150 per cent increase in spot market trading volume,” says Mr Gupta. “This surge in demand for Bitcoin is fuelled by the launch of Bitcoin ETFs, signalling a maturing market.”

The growth trend is not limited to Bitcoin.

The company has seen “significant growth across large-cap cryptocurrencies like Ethereum, Solana, Shiba Inu, and Binance Coin”, says Mr Gupta.

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The rise in demand “isn’t just confined to retail investors – we’ve also seen a notable increase in engagement from high-net-worth individuals and institutional investors”.

Regulation catch-up

However, despite the renewed interest in virtual assets, exchanges are reporting that the current tax regime continues to dampen investor appetite.

“Changes in India’s regulatory landscape, including a new tax regime, have influenced the cryptocurrency appetite,” says Pranav Srivan Elankovan, founder of Crypfi, a cryptocurrency exchange.

“The introduction of taxes and regulatory uncertainties has prompted investors to adopt a more cautious approach, potentially dampening demand.”

The taxes in 2022 have had an enormous impact on the industry, Mr Menon says.

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“The moment this happened, [crypto investors] stopped trading in India,” he says.

“They fled to exchanges abroad, because crypto knows no boundaries. So, you had a lot of foreign exchanges or offshore exchanges benefiting from Indian customers actually shifting the capital abroad.

“Our volumes were down by 90 per cent in the bear markets”, by the end of 2022 and last year, he says.

However, he adds that the “Indian government has taken a very serious view of offshore exchanges not complying with Indian laws” and is taking steps to prevent Indian citizens from trading cryptocurrencies on them, thereby benefiting Indian exchanges.

In January, India blocked access to the websites of major global cryptocurrency exchanges after issuing notices to them for not complying with the country’s money laundering laws.

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Furthermore, despite the high 30 per cent tax rate, it is widely accepted within the industry that this serves as a clear indication that the government acknowledges cryptocurrencies as a legitimate form of investment. Speculation had long persisted that India would impose a ban on cryptocurrencies.

“Sustained demand hinges on ongoing regulatory clarity and the confidence of investors in the Indian cryptocurrency market,” says Mr Elankovan.

Sidharth Sogani, the founder and chief executive of the cryptocurrency research firm Crebaco, made the decision to relocate from India to Dubai three years ago. He cited the UAE’s more “robust and open-minded” approach to the cryptocurrency market as a key factor in his decision.

He states that despite the Bitcoin rally, Indian cryptocurrency exchanges are still at a disadvantage.

“Volumes have not reached the previous bull cycles we observed in 2021, when the market had a way higher volume, and exchanges were more aggressive and they were advertising a lot,” says Mr Sogani.

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He asserts that regulation is of paramount importance.

“India is not a regulated market for crypto. It is legal, but it’s not regulated – they are two different things,” says Mr Sogani.

“When you say regulation, that means the regulatory body is responsible for all the market exchanges to report in a certain manner and that regulatory body does not exist yet. Once it does exist, there will be a different market for India.”

What is Bitcoin and how did it start?

The exchanges have expressed their openness and readiness to embrace a regulatory framework.

“We want clear guidelines,” says Mr Menon. “For example, it’s very difficult, even now, for Indian crypto companies to get reliable banking connections.”

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But he believes “a change is on the horizon”. This belief stems from India’s recent actions under its G20 presidency, which together with other member nations, embraced a strategic plan to guarantee a synchronised execution of a policy framework for crypto assets.

“We are hopeful that regulation will make the [cryptocurrency] industry a better place to be in and things would be much better in the coming years for India,” says Mr Menon.

Updated: March 18, 2024, 5:30 AM

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Cryptocurrency Ethereum Classic's Price Increased More Than 3% Within 24 hours

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Cryptocurrency Ethereum Classic's Price Increased More Than 3% Within 24 hours

Over the past 24 hours, Ethereum Classic’s ETC/USD price rose 3.24% to $28.32. This continues its positive trend over the past week where it has experienced a 7.0% gain, moving from $26.36 to its current price. As it stands right now, the coin’s all-time high is $167.09.

The chart below compares the price movement and volatility for Ethereum Classic over the past 24 hours (left) to its price movement over the past week (right). The gray bands are Bollinger Bands, measuring the volatility for both the daily and weekly price movements. The wider the bands are, or the larger the gray area is at any given moment, the larger the volatility.

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The trading volume for the coin has decreased 54.0% over the past week, while the overall circulating supply of the coin has decreased 0.04% to over 146.68 million. This puts its current circulating supply at an estimated 69.62% of its max supply, which is 210.70 million. The current market cap ranking for ETC is #28 at $4.15 billion.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.

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Bitcoin Technical Analysis: BTC Bulls Attempt to Push Prices Higher Post-Halving – Markets and Prices Bitcoin News

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Bitcoin Technical Analysis: BTC Bulls Attempt to Push Prices Higher Post-Halving – Markets and Prices Bitcoin News
Bitcoin Technical Analysis: BTC Bulls Attempt to Push Prices Higher Post-HalvingAs bitcoin fluctuates within a defined range, Monday’s technical analysis reveals a mixed bag of signals from oscillators and moving averages. Traders face a nuanced landscape on April 22, 2024, as various charts suggest both caution and opportunity. Bitcoin Bitcoin’s (BTC) price today stands at $65,974, with a 24-hour trade volume of $19.6 billion and […]
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NFTs, crypto & a web of deceit: How a Bengaluru digital artist was duped

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NFTs, crypto & a web of deceit: How a Bengaluru digital artist was duped

Bengaluru: A dubious website, non-fungible tokens (NFTs), and cryptocurrency payments formed the crux of a scam that saw a 71-year-old digital artist in East Bengaluru getting conned into paying about Rs 1.58 lakh over a non-existent sale.

Shivaprasad R (name changed), a practising chartered accountant (CA), said he began doing digital art during the Covid-19 pandemic and nearly 50 of his paintings were part of several exhibitions in Bengaluru. His works were also uploaded on his Facebook and Instagram accounts.

In October 2023, a person claiming to be an NFT art dealer on Facebook introduced Shivaprasad to www.nfttradeplace.com — a marketplace for NFTs which are digital certificates of ownership for unique items like art, music, etc. stored on a blockchain that works as a digital ledger. Unlike cryptocurrencies, NFTs are distinct and cannot be exchanged on a like-for-like basis.

The “art dealer” told the artist that he was interested in his paintings and offered to buy them. Next, “negotiations” were held through Facebook and email, and 42 Ethereum (ETH) — a type of cryptocurrency worth approximately Rs 1.09 crore as of April 17, when the complaint was filed — was decided as the price.

“The bill was quoted by the victim during the negotiations,” a cybercrime investigator told DH.

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Shivaprasad listed four paintings — Climactic, Wuhan Effect-1, Welcome to Kashmir and Climactic (second copy) — with 10, 10, 10 and 12 ETH as going rates, respectively. On February 1, 2024, he made the first payment and sent 0.115 ETH, equivalent to Rs 21,653.72, as “Gas Fee” or transaction fee.

“The victim made the payment from his crypto wallet, which he set up at the scammer’s behest,” the investigator said. As the sale was completed, Shivaprasad raised his first withdrawal request of 6 ETH. He waited for a few days, but no transaction was made. When he checked again, Shivaprasad was asked to pay a “delay fee” as he had held up the withdrawal of the cryptocurrency.

“This delay fee was never discussed nor was it exhibited on the website,” Shivaprasad said in his complaint. “Helpless, since I did not have ETH in my wallet, I asked if I could make the delay fee payment in Indian rupees,” he said.

The fraudsters accepted Shivaprasad’s request and as instructed on the website, the victim made four payments to Mohammed Ekramul Haque and Mohammad Farooq through bank and UPI transfers on February 5 (two payments of Rs 25,000 each), February 6 (Rs 22,000), and February 9 (Rs 50,000).

The last payment of Rs 15,000 was made to SK Humayun through PhonePe on March 15. “Even after making the above-said payments, the website kept asking me for further payments for the withdrawal of 6 ETH,” Shivaprasad said. He added that he hadn’t raised a request for the balance cryptocurrency as he was worried about more demands for payment.

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His request to deduct the delay fees from the amount of sale and remit the rest was ignored. 

On April 17, he reached out to the cyber police who opened a case under 66C (punishment for identity theft) and 66D (punishment for cheating by personation by using computer resources) of the Information Technology (IT) Act and 420 (cheating and dishonestly inducing delivery of property) of the Indian Penal Code (IPC).

“The first red flag was when the victim had to pay money in the form of fees,” an officer said. “It is highly difficult to trace cryptocurrency trails. As of now, bank details and domain details of the email address used by the scammers have been sought,” the officer said.

The sale that wasn’t 

The scam centred around a website posing as a non-fungible token (NFT) marketplace Conman targets senior digital artist, feigning interest in his work Negotiations made through social media and email, with a high cryptocurrency price set for the art Despite completing the sale, fund withdrawal blocked by a ‘delay fee’ Multiple payments extracted from the victim under various pretexts.

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(Published 22 April 2024, 02:17 IST)

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