A recent UNCTAD policy brief says every seventh person in India held a cryptocurrency in 2021, and the largescale adoption in absence of regulations poses risks of financial instability.
Released on August 12, the UNCTAD report sparked a fresh debate about India’s crypto regulation bill that the government planned to bring to parliament at least twice last year but now seems to have shelved the idea altogether.
A report in The Economic Times on Friday quotes Shivam Thakral, CEO, BuyUcoin, as saying, “India’s crypto industry is too big to ignore and a strong, business-friendly policy for the crypto industry will enable investors to trade with confidence and boost the morale of the young workforce willing to make a career in this space.”
The report further quotes Tarusha Mittal, COO, and co-founder, UniFarm, who says India should not miss the opportunity to become the world’s blockchain capital.
The UN trade and development body UNCTAD, in its report titled “All that glitters is not gold: The high cost of leaving cryptocurrencies unregulated”, has said that India stands at the 7th position in cryptocurrency adoption. The report noted that 7.3% of its billion-plus population held cryptocurrencies in 2021.
In the top 20 countries in crypto adoption, only two developed countries were ahead of India – the US at the 6th position and Singapore at the 4th position.
“The cryptocurrency ecosystem expanded by 2,300 per cent between September 2019 and June 2021, particularly in developing countries. According to some estimates of digital currency ownership, in 2021, 15 of the top 20 economies in this field were emerging market and developing economies,” the report says.
The UNCTAD report cites two critical reasons for the growth in adoption of cryptocurrencies during the pandemic – increased adoption for more accessible and cheaper remittances and middle-income group people investing in cryptocurrencies to “save house savings” in the wake of economic slowdown.
“Currently, over 450 crypto exchanges in May 2021 reached a combined peak of $500 billion in daily trades, equivalent to the maximum daily trading achieved on Nasdaq, the second-largest stock exchange worldwide, in January 2022. The largest crypto-exchange, which has 28 million users, reached a record level of daily trading in November 2021, at $76 billion,” the report underlines the growing infrastructure and volume of crypto trade.
The UN trade and development body finds the trend disturbing for developing nations for two reasons. First, it may lead to the financial instability by providing a “new channel of illicit financial flows.” Second, it may undermine “capital controls.”