India allocating billions into crypto. The country has shown an increasing amount of interest and exposure to cryptocurrencies compared to last year.
Takeaways:
- Crypto investment has exploded in India over the past year
- India has had a very confusing history when it comes to crypto regulation
- People wish for a good store of value and bitcoin is a very solid choice
- As trust within the asset class grows, so will adoption
Crypto as the new gold
India has seen a surge of cryptocurrency use within the last year, as it quietly becomes the preferred store of value for many, especially for young people. The country is known to have a special relationship with gold, the culturally dominant store of value – often worn as jewellery. Yet, as times change so do cultural customs and preferences. 
According to data by Chainanalysis, a prominent blockchain analysis firm, crypto investment grew from somewhere around $200 million to close to $40 billion within the last year. This was quite unexpected, especially since the country currently sits in a phase of regulatory uncertainty. Just earlier this year, government sources were talking about a complete ban on crypto: a bill was to be presented to the Parliament in March, that would have made crypto trading and holding illegal – yet that hasn’t happened.
India and crypto
Being the world’s second-largest country population-wise, with an estimated 1.35 billion people living within the geographic area, India has been a market to keep an eye on. The past year has seen many of the biggest exchanges worldwide wanting to get into the action. Binance has already entered the Indian market in 2019, with their acquisition of WazirX, India’s largest crypto exchange. Anonymous sources told Reuters that Kraken, Bitfinex, and Kucoin are eyeing India, adding that: “These companies have already begun talks to understand the Indian market and the entry points better”. Coinbase has also announced plans to open offices in India.
The country itself has quite the confusing history when it comes to its regulatory stance on crypto. “India banned crypto again” is a common meme within the crypto community – and while it is a joke, it does hint at the fact that Indian regulators have gone back and forth.
The country’s central bank (like most central banks) is definitely not fond of the millions of people getting involved with crypto. Back in February of this year, Reserve Bank of India governor Shaktikanta Das told reporters that the central bank sees crypto as being a risk to “financial stability” – he also mentioned that the bank is working on their own CBDC, a digital Rupee.
Until March 2020, the crypto landscape in India relied on over-the-counter (OTC) or pure crypto-to-crypto trading, this however changed after a Supreme Court ruling early last year. The ruling effectively lifted a 2018 decision by the Reserve Bank of India (RBI), which banned Indian financial institutions from providing banking services to crypto exchanges. One of the largest economies of Asia opened up to crypto again.
A good store of value
“When stores of value compete against each other, it is the specific attributes that make a good store of value that allows one to out-compete another at the margin and increase demand for it over time” – Vijay Boyapati
