The slogan of cryptocurrency fans that Bitcoin is akin to digital gold is finding converts among world’s largest gold holdings.
As per Chainalysis, crypto investments in India increased from approximately $200 million to almost $40 billion in the last year, with families owning more than 25,000 tonnes of gold. Notwithstanding the central bank’s open animosity toward the investment market and a potential trading prohibition, this is the case.
According to the co-founder of India’s first cryptocurrency, the 18-35 year old group is driving growth in the country. According to the World Gold Council, Indian individuals under the age of 34 have a lower taste for gold than older customers.
Regulatory ambiguity is one of the most significant impediments to widespread adoption. The year before, the Supreme Court overturned a 2018 regulation prohibiting financial institutions from trading cryptocurrency, causing a boom in trade.
Authorities, on the other hand, show no evidence of accepting cryptocurrency. The country’s central bank has expressed “serious worries” about the investment market, and the Government of India recommended a ban on trade in digital currencies six months ago – though it has remained silent ever since.
However, because of the official antagonism, many larger individual investors are hesitant to discuss their holdings openly. Without any clear income tax regulations in place at the moment, one banker Reuters spoke to who spent more than $1 million in crypto assets expressed anxiety about the prospect of retroactive tax searches if he was widely known to be a huge crypto investment.
To be fair, India’s mobile application holdings are a fraction of the country’s price of gold. Still, there is evidence of growth, particularly in trading: according to CoinGecko, daily trade on the four largest crypto exchanges increased to $102 million from $10.6 million a year earlier. According to Chainalysis, the country’s $40 billion market is substantially less than China’s $161 billion.
For the time being, the rising adoption is another evidence of Indians’ readiness to accept risks in a retail banking sector beset by regulatory failures.