A

PROJECT REPORT

ON

“A study on impact of cryptocurrency on investors and Indian economy”

Submitted To

Savitribai Phule Pune University

For the award of degree of

Bachelor of Business Administration.

Submitted by

Himanshu Vijay Bagale

Under the guidance of

Dr. Pragati Richa Pandey.

G. S. Moze College of Engineering, Pune.

Academic year 2023-2024

1
 G. S. Moze College of Engineering, Pune.

Academic year 2023-2024

CERTIFICATE

This is to certify that Mr. Himanshu Vijay Bagale has submitted the project report titled “A
Study on impact of cryptocurrency on investors and Indian economy”, towards partial
fulfillment of BACHELOR OF BUSINESS ADMINISTRATION degree examination.
This has not been submitted for any other examination and does not form part of any other
course undergone as prescribed by Savitribai Phule Pune University. It is further certified that
he has ingeniously completed his project.

DR. PRAGATI RICHA PANDEY DR. GEETA NAIDU

(Project guide) (Co-Ordinator)

Place:
Pune Date: 30-
05-2023
2
 G. S. Moze College of Engineering, Pune.

Academic year 2023-2024

DECLARATION

I here-by declare that the project with title “A Study on impact of cryptocurrency on
investors and Indian economy”, has been completed by me in partial fulfillment of
BACHELOR OF BUSINESS ADMINISTRATION degree examination as prescribed
by Savitribai Phule Pune University and this has not submitted for anyother examination and
does not form the part of any other course undertaken by me.

Place: Pune Mr. Himanshu Vijay Bagale

Date: 30-05-2023

3
 G. S. Moze College of Engineering, Pune.

Academic year 2023-2024

ACKNOWLEDGEMENT

With immense pride and sense of gratitude, I take this golden opportunity to express my
sincere regards to Dr. Kulkarni ,Principal, G. S. Moze College of Engineering, Pune

I am extremely thankful to my project guide Dr. Pragati Richa Pandey for the guideline
throughout the project. I tender my sincere regards to coordinator, Dr. Geeta Naidu, for giving
me outstanding guidance, enthusiastic suggestion and invaluable encouragement which
helped me in the completion of the project.

I will fail in my duty if I do not thank the non-teaching staff of the college for their co-
operation.

I would like to thank all those who helped me in making this project complete and successful.

Place: Pune. Mr. Himanshu Vijay

Bagale

Date: 30-05-2023

4
 INDEX

Sr no. Particulars Page no.

1. • Introduction: 7-10
What is cryptocurrency?
Top cryptocurrencies in India.

2. Problem Definition: 11-15

Introduction
Relevance
Need
Objective of Research
Hypothesis

3. Data Collection & Research Methodology. 16-18

4. SWOT analysis 19-22

5. Benefits and criticism of cryptocurrency 23-26

6. Cryptocurrency in India 27-33

Introduction
Timeline of RBI and cryptocurrency
Laws related to cryptocurrency
Impact on economy.

7. Investment in cryptocurrency
Introduction 34-37
Investors in cryptocurrency
Future

8. Data analysis and Interpretation 38-55

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9. Hypothesis analysis 56

10. Conclusion 57

11. Bibliography 58

12. Annexure 59-67

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INTRODUCTION

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 Cryptocurrency

The battle is finally over. For nearly two years the Indian courts have been fighting to lift the ban of
cryptocurrency in India. It is remarkable that on March 4, 2020, The Supreme Court of India lifted the ban
on cryptocurrency including the Bitcoins. The RBI’s circular of April 2018 has been declared
unconstitutional. The RBI’s proposed ban has become a rallying point for multiple stakeholders in the
crypto industry to come together and push for stronger regulation rather than shunning cryptocurrency for
all its potential. The positive decision has taken the nation into a state of utter exuberance and hope for
what is to come in the future for us. With this upliftment of the ban, India has an opportunity to draw on
India’s huge population of over 300 million unbanked people. While India’s counterparts around the globe
are moving into blockchain technology, we risked giving up the potential promised by co-opting crypto.

The country is a sleeping giant with a population going up one billion. India has the power to change the
global economy, all thanks to a positive decision by the Supreme court. The CEO of Pundi X, Zac Cheah
said that India’s Apex Court removing the crypto ban just confirms the reality that cryptography and
blockchain are emerging innovations. India is Pundi X’s second-largest blockchain wallet customer.
Allowing cryptocurrency transfers will increase our customer base and put rising volumes of customers into
the digital payments fold.

What is cryptocurrency?
A cryptocurrency is a digital or virtual currency protected by cryptography which makes counterfeiting
or double- spending almost impossible. Most cryptocurrencies are decentralized, blockchain-based
networks — a public database operated by a dispersed computing network. One distinguishing
characteristic of cryptocurrencies is that they are usually not distributed by any central agency, rendering
them potentially resistant to intervention or abuse by the government.

The term “crypto-currency” derives from the encryption methods used to protect the network.
Cryptocurrencies attract scrutiny for a variety of reasons including their use for illicit activity, exchange
rate fluctuations, and network flows that underlie them. They were also praised for their portability,
accountability and divisibility.
Cryptocurrencies are almost always intended to be free of government influence and regulation, but this
core feature of the technology has come under fire as they have become more common. The currencies
modelled after bitcoin are called altcoins collectively and have often attempted to present themselves as
modified or improved versions of bitcoin.

The first cryptocurrency based on blockchain was Bitcoin, which remains the most popular and valuable.
Bitcoin was introduced in 2009 by a person or collective known as “Satoshi Nakamoto.” As of November
2019, more than 18 million bitcoins were in circulation with a cumulative market cap of about $146
billion. Bitcoin is one of the first digital currencies to use peer-to-peer technology to enable online
transfers. Some of Bitcoin’s success spawned competing cryptocurrencies, known as “altcoins,” including
Litecoin, Peercoin, and Namecoin as well as Ethereum, Cardano, and EOS. Today the aggregate value of
all existing cryptocurrencies is around $214 billion — Bitcoin currently accounts for more than 68 per
cent of the total value.

The top cryptocurrencies

Here are the top cryptocurrencies in India.
The cryptocurrency hype has traveled from the west and reached India, attracting investors with its high
value. Be it, seasoned investors or novice enthusiasts, everyone wants to partake in a conversion about
cryptocurrencies and give opinions. While many NRIs have good knowledge about the growing
cryptocurrency market, Indians need to update themselves with the market news.

8
After the recent market dip brought by China’s crypto ban, the low crypto coin prices have caught the
interest of Indian investors and skeptics. People, who were once against risking money in such a volatile
market due to highprices, are now ready to make their first, albeit small cryptocurrency investment.

For you to get started, here are the top cryptocurrencies to buy and hold in May 2021. As of today, the
crypto marketis in recovery, which makes this an ideal time to invest.

1. Bitcoin (BTC)
Price today: INR 3,246,223

For Indians, Bitcoin is synonymous with cryptocurrency. And rightfully so, because this was the first and
is the highest valued crypto in the market right now. After reaching an all-time high of about $65000 in
April this year, the price started plummeting recently, thanks to Elon Musk’s tweet about Tesla not
accepting Bitcoins anymore (initially, Tesla had decided to accept Bitcoins as a mode of payment). If you
have the budget, now is the best time to buy Bitcoin as the price dropped by almost 30%.

2. Ethereum
Price today : 158,130.49
Ether, introduced in 2015, is presently the second-biggest digital currency by market value behind bitcoin,
but it lags by a substantial margin behind the dominant cryptocurrency. Effective January 2020, the market
value of ether is around 1/10 the size of bitcoins. Ethereum is focused on realistic smart contracts for the
digitalisation of transactions used by several companies. Ethereum is a decentralized computing framework
that enables the construction and running of Smart Contracts and Decentralized Applications without any
third party interruption, theft, power or intervention. On Ethereum, the programs run on the platform-
specific cryptographic token, ether.

3. Binance Coin
Price today: INR 31,390

As per market capitalization, Binance Coin is the third-largest cryptocurrency, the first two being Bitcoin
and Ethereum. In 2017, Binance Coin was launched by one of the world’s largest cryptocurrency
exchanges Binance, as a utility token. Hence, the pricing of this crypto coin depends on its utility on the
Binance platform. In simple terms, if more people use Binance Coin to trade other cryptos, its value will
increase. Experts predict that by the end of May 2021, the price of one Binance Coin will hit $505.

4. Ripple:
Launched in 2012, Ripple helps banks to real-time settle cross-border trades for end-to-end transparency and
lower costs. With its new business model, Ripple has seen success; it remains one of the most appealing
digital currencies

9
for mainstream financial institutions finding ways to revolutionize cross-border payments. This is also
the world’s third-largest cryptocurrency by overall market value at this time. Ripple had a market cap of
$9.2 billion as of January 8, 2020, and a stock of $0.21 per token.

5. Dogecoin (DOGE)
Price today: INR
31.605

It is baffling how a crypto coin that started out as a meme is now a leading player in the market.
Unofficially endorsed by the “Dogefather” Elon Musk, Dogecoin is a cheaply priced cryptocurrency with
immense growth expectations. Though the market crash had stumped the price of Dogecoin, it is still the
fourth-largest cryptocurrency as per the market cap.
PROBLEM DEFINITION

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 RELEVANCE OF THE STUDY

• This study is relevant to understand deeply the impact of cryptocurrency on investors

decisionmaking and the economy.

o .
• It plays vital role in financial investments nowadays and helps raising digital capital and does
affects growth of economy.

• To meet the current requirements of the digital era and influence decisions of the investors.

� • Analysing the strengths and weaknesses of cryptocurrency in India.

� • Analysing the current position of cryptocurrency and its investors.

� • Providing information about the economic position of the economy post

introduction ofcryptocurrency.

� • Studying the change cryptocurrency have made on investors and economy.

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 OBJECTIVES OF THE STUDY

• • The objectives of this study are as follows:

• • To learn the impact of cryptocurrency on Indian economy

• • To study the current status of cryptocurrency in India and the future it holds

• • To understand the significance of cryptocurrencies according to the perception of investors.

• • To analyse the perception of investors towards cryptocurrencies.

• • To study the factors considered by the investors & those which ultimately influence him
whileinvesting.

• • To predict the future prospects of the cryptocurrency investment market.

• • Examining the current profitability of various cryptocurrencies. Analysis helps in finding

out theearning capacity and returns of cryptocurrencies.

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 NEED OF THE STUDY

• • This study will help us to gain knowledge about cryptocurrencies and its impact and will
help usunderstand various topics such as-

• • Will India have any positive financial leverage by the usage of Bitcoin?

• • Should India say yes to Bitcoin?

• • The crafting of this study is to make us have better understanding towards-

• • Bitcoin, Lakshmi Coin and Cryptocurrency.

• • . This study provides an opportunity to develop analytical skills, technical skills and give
exposuretowards digital currency revolution.

• • To give the overview of the cryptocurrency market in India.

• • To find out the financial position of the company.

• • To find out profitability of the company.

• • To know the assessing operating efficiency.

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 HYPOTHESIS

Hypothesis 1-

H0- There is positive impact of cryptocurrency on Indian economy.

H1-There is negative impact of cryptocurrency on Indian economy.

Hypothesis 2

H0 - cryptocurrencies have significantly impacted the investment decisions of investors .

H1- cryptocurrencies have least impact on investment decisions of investors .

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DATA COLLECTION AND RESEARCH

METHODOLOGY

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 TYPE OF RESEARCH USED.

Research can be classified in many different ways on the basis of methodology of the research, the knowledge

it creates, the user groups, the research problem it investigates, etc. Following is the methodology that we

have used in research:

Quantitative Research:

In natural and social sciences, and sometimes in other fields, quantitative research is the systematic empirical

investigation of observable phenomena via statistical, mathematical, or computational techniques. The

objective of quantitative research is to develop and employ mathematical models, theories, and hypotheses

pertaining to phenomena. The process of measurement is central to quantitative research because it provides

the fundamental connection between empirical observation and mathematical expression of quantitative

relationships.

Quantitative research is generally closely affiliated with ideas from 'the scientific method', which can

include:

� • The generation of models, theories and hypotheses.

� • The development of instruments and methods for measurement.

� • Experimental control and manipulation of variables.

� • Collection of empirical data.

� • Modelling and analysis of data.

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 TYPES OF DATA USED

Here, we have used both Primary and Secondary Data while conducting research.

What is primary data?

Primary data is the data collected directly by the researchers from main sources through interviews, surveys
, experiments, etc. primary data are usually collected from the source –where the data originally originated
from and are regarded as the best kind of data in research.

In this project questionnaire method for survey is used for collection of primary data.

What is Secondary Data?

Secondary data is the data that have been already collected by and readily available from other sources.

Such data are cheaper and more quickly obtainable than the primary data and also may be available when

primary data cannot be obtained at all.

Here, various websites,books and journals are been reffered for secondary data .

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SWOT ANALYSIS

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Bitcoin strengths: cryptocurrency can’t be tracked or stolen.

Bitcoin uses blockchain (a peer-to-peer) network between the sender and the receiver. Only these two
parties are involved. It’s unlike any other method of transferring currency — which involves a third party,
like a bank. A middleman is prohibited from Bitcoin transactions.

And since that pesky third party doesn’t exist, it makes Bitcoin a tax-free currency. The government
doesn’t control or regulate Bitcoin.

For most Bitcoin users, this is an insane positive because it’s not folly to economic turmoil. Bitcoin’s worth
is agreed upon by the sender and the receiver. Not an institution. Even if the economy crashes, Bitcoin can
survive.

Surprisingly, this isn’t why Bitcoin’s popularity skyrocketed within the last few years.

The real strength is the secrecy.

Every person in the Blockchain network has a private wallet address. Trading Bitcoin is fully anonymous.
It’s 100 percent untraceable. Unless you decide to make your wallet address — but the majority of users
don’t. Because the anonymity makes your financial data fully hidden.

A unique PIN number assigned to each Bitcoin masks the identity of the seller. Once the Bitcoin is sold,
the PIN changes anew. At this point, only the buyer knows the PIN. It’s irreversible, unless the current
owner decides to change the ownership back.

Although this means nothing can be done once the Bitcoin is sent, it also means you can’t steal this
currency. You can steal your physical wallet. You can steal credit card info and hijack your online bank
account. But you can’t steal Bitcoin.

It’s because of this increased security that pushes people towards cryptocurrency.

Bitcoin weaknesses: crippling slow transactions and accessibility loss.

Bitcoin transactions aren’t as fast as they were a few years ago. This is one of the downsides of
Blockchain: the more people use it, the more Blockchain limits your transactions speeds.

Basically, the blocks get bigger the more it’s in use. Making the whole process clunky and slow. Until this
problem is resolved, it’s unlikely Bitcoin currency will usurp conventional credit card usage.

The system isn’t the only issue.

Don’t forget about the Bitcoin wallet password problem. Since the transactions are encrypted, recovering a
lost password isn’t possible. You’d be surprised how often people forget their password and lose access to
their Bitcoins. In fact, one man bought a few Bitcoin years ago when it was dirt cheap. Now it’d be worth
millions… if only he could find his password to his wallet.

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And what about the survivability of Bitcoin?

The value of Bitcoin has shifted relentlessly over the years. And despite the rocky nature, the media pushes
out stories claiming Bitcoin is the future of money.

It’s just like stocks, however; unpredictable and unreliable. Tomorrow, the value could skyrocket. The day
after, it may plummet. The reliability of this currency is too questionable to replace traditional money.

Bitcoin opportunities: Safety from compromising data breaches

As a society, we’re moving away from physical money in favor of cashless currencies. In fact, big names
like Amazon are already accepting Bitcoin as payment for their goods. If companies the size of Amazon
are recognizing Bitcoins’ viability, it’s safe to assume others will follow.

And what about the growing hostility between the public and the banking institutions?

People are looking for safe, secure, and practical means to avoid using banks. Data breaches, involving
customer data, is consistently occurring with brands like Facebook and Wells Fargo. How long until the
breaches steal credit card info?

No one wants to find out. And others are moving towards Bitcoin. Even with the hang-ups, it’s safe.
Anonymous. And doesn’t involve third parties.

And the opportunities don’t stop there.

The blockchain is a phenomenal technology with much promise. The blocks may be able to keep data like
criminal records, birth certificates, and public records private. It may pave the way for impenetrable
encryption. That’s something the masses are leaning towards for data protection.

Bitcoin threats: the anonymity against governments and banks.

Anonymity is a benefit. An opportunity. But it’s also a problem.

In the wrong hands, anonymous buying is dangerous. Knowing the transaction is untraceable will attract
the attention of criminals. Because let’s be honest: the more people accept Bitcoin, the more it’ll likely be
used for more nefarious reasons.

It’ll also be a problem for the government or law enforcement, after all. If more criminals adopt Bitcoin
into their illegal purchases, law enforcement will face a challenge in finding and prosecuting these
criminals.

As such, we may see more policies and laws regarding cryptocurrency. Although it may be difficult to
enforce thanks to the anonymity, the government will still try.

People fear the consequences of these bills. New tech policies miss the mark. Not enough government
officials understand the implications of using Blockchain and cryptocurrency. Instead of learning, they’re
more likely to slap on a bill and hope for the best.

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Bitcoin isn’t the only cryptocurrency on the market. After its rise in popularity, alternatives like Ethereum
and Peercoin hit the markets. If the value of these alternative skyrockets, Bitcoin may be in trouble. To be
honest, the overall value of cryptocurrency and lack of reliability is a threat to Bitcoin and its competitors.

And just because cryptocurrency appears infallible now, doesn’t mean it will in the future. As more
information about it surfaces, the holes will reveal themselves. People, such as criminals, will take
advantage of the issues ASAP.

BENIFITS OF CRYPTOCURRENCY

Benefits of cryptocurrency

Job opportunities – With many startups re-entering the market, competition for top talent in the area of
blockchain technology and cryptocurrencies may increase. From blockchain developers to programmers,
production engineers and project managers, there will be many suitors for top talent in the field of
blockchain. Industry consultants, advertisers, content developers and group administrators among others
will now have a major role to play in the national embrace of cryptocurrencies that will now be sought by
many startups. The RBI will now be encouraged to help control the world of opportunities that
cryptocurrencies generate. The stance made clear by the Supreme Court should that the RBI rethink its
restrictive approach to cryptography and then come up with more balanced and well-thought-out rules to
protect the public interest and that of other ecosystem stakeholders. The RBI can take a leaf out of its
global peers, as many central banks have launched their cryptocurrencies in other countries. Nonetheless,
the expectation here is that the latest measures will press for more acceptance and tighter enforcement.

Immunity from theft – At present, the financial system, and the resultant economy, is not immune to
robberies or fraud. As we know the planet is becoming more vulnerable to complex leaks and hacks. With
several ransomware attacks, data leaks from top-notch banks and credit card companies, news headlines
have been abuzz in the last few years. India was going digital at the time, the base of which was built on
Aadhaar authentication, Jan Dhan accounts etc. However, the same does give rise to flaws in technology,
with criminals planning to break the authentication mechanism of Aadhaar or Jan-Dhan accounts. In
making cryptocurrencies all verified transactions must be deposited in a public ledger. To ensure the
legitimacy of record keeping, all identities of the coin owners are encrypted. You own it because the
currency is decentralized. It has no power over either the government or bank.
Accessibility – Blockchain is the reason why crypto-currency is worth something. Ease of use is the reason
why there is a high demand for crypto-currency. All you need is a mobile screen, an internet connection,
and you easily make payments and money transfers to your accounts. There are more than two billion
people with access to the Internet who cannot use conventional forms of trade. These people are clued-in to
the crypto-currency market.
Global economies – Crypto-currency presents Indians with a golden opportunity to be on par with the
global economy, particularly the present burgeoning millennial generation. A cryptocurrencies-led
economy is a decentralised economy. There is plenty of time and money to secure third-party approvals,
and all the time and energy spent in negotiations will no longer be needed when buying, for example, a
house etc. Considering some of the trailblazing and epoch-making trends of the past, including the
emergence of the internet, the technological economy, the creation of Silicon Valley etc., India has just
sought to balance the pace of global innovations.

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 CRITICISM OF CRYPTOCURRENCY

Criticism of cryptocurrency
The semi-anonymous aspect of cryptocurrency transfers makes them ideal for a variety of illegal practices,
such as money laundering and tax evasion. Crypto-currency supporters, though, also strongly respect their
anonymity, citing privacy advantages such as protection for whistleblowers or dissidents living under
oppressive regimes. Some cryptocurrencies are more intimate.

The cryptocurrency form is not exempt from any financial and security issues. I reviewed many studies and
cryptocurrency networks and even explored several markets for selling cryptocurrency to investigate the
difficulties and problems that occur in this interactive phenomena.

Money laundering – Money laundering is one danger that is highly likely to increase with the usage of VC
especially with platforms that allow users to exchange virtual currency with real money. In realistic
situations, the police detained a group of 14 people in Korea in 2008 for stealing $38 million from virtual
currency transactions. The group translated the $38 million that gold farming produces from Korea into a
paper firm in China as purchasing payments.
Black market – Perhaps one of the biggest drawbacks and security issues affecting blockchain is its
potential to promote criminal activity. There are several anonymous trades on the grey and black markets
denominated in Bitcoin and other cryptocurrencies. For example, Bitcoin was used by the notorious “dark
web” platform Silk Road, promoting illegal drug sales and other criminal acts before being shut down in
2014. Cryptocurrencies are now highly common money-laundering devices. They unlawfully acquired
money by funnelling through a “safe” conduit that conceals the origins. For examples, when a gamer wants
to leave a game, he/she may want to sell the virtual currency that he/she owns by selling it in the game
forums. The way payments are collected is dangerous because many fraudulent users can not complete the
payment, or challenge after payment. They will then get their money back plus the virtual currency.
Tax evasion – Since national governments do not oversee cryptocurrencies, cryptocurrencies typically
remain outside of their direct jurisdiction, attracting tax evaders naturally. In Bitcoin and other coins,
several small companies pay workers. They do so to reduce payroll tax responsibility and to help avoid
income tax obligation for their workers. Even they embrace tokens from online traders to attempt to escape
selling and income tax responsibility.
No refunds – The notion of such an arbitrator violates the decentralizing spirit at the heart of the new
theory of cryptocurrencies. What this means is that if you’re robbed in a crypto-currency deal you don’t
have someone to turn to. Although cryptocurrency miners play a role in cryptocurrency transactions as
quasi-intermediaries, they are not responsible for arbitrating conflicts between the transacting parties. An
example is to pay upfront for an item that you never get. Large payment providers such as MasterCard,
Visa and PayPal also move in to help solve conflicts between buyers and sellers. Their method of paying
for, or refunding, is intended to avoid vendor fraud. Although some newer cryptocurrencies seek to
resolvethe surrounding chargebacks or refunds problem, the solutions remain incomplete and still
unproven.
Data loss – Considering a virtually uncrackable source code, impenetrable authentication protocols (keys)
and sufficient security protections (which Mt. Gox lacked), keeping money in the cloud or a physical data
storage unit is better than in a backpack or back pocket. Also, those who store their data in a single cloud
provider will risk failure if the server is physically compromised or removed from the internet. The early
advocates of crypto-currency believed that, if properly protected, digital alternate currencies agreed to help
23
a definitive step away from traditional cash, which they find to be unreliable and potentially dangerous. All
this means cryptocurrency consumers are taking reasonable and appropriate measures to avoid data loss.
For example, if their computer is lost or robbed, the consumers who store their private keys on single
physical storage devices will incur a permanent financial loss.
High price and not exchangeable – The most popular cryptocurrencies, those with the highest dollar
market capitalisation, have dedicated online exchanges allowing direct exchange for fiat currency. The
remaining cryptocurrencies have no dedicated online exchanges. Many cryptocurrencies have few
extraordinary units and are concentrated in the hands of a handful of individuals (often currency developers
and close associates). For fiat currencies, they are therefore not explicitly exchangeable. Instead, before the
fiat currency conversion, consumers could turn them into more widely used cryptocurrencies, including
Bitcoin. These holders manage currency stocks efficiently, making them vulnerable to fluctuations in wild
valuation and simple manipulation. This suppresses competition for some less-used cryptocurrencies, and
thus the valuation of others.

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CRYPTOCURRENCY IN INDIA

25
 INTRODUCTION

Crypto currencies could provide a significant benefit by overcoming the lack of social trust and by
increasing the access to financial services (Nakamoto, 2008) as they can be considered as a medium to
support the growth process in developing countries by increasing financial inclusion, providing a better
traceability of funds and to help people to escape poverty (Ammous, 2015).
To provide a comprehensive overview of the opportunities of crypto currencies in developing countries, it
is necessary to understand the general advantages and disadvantages crypto currencies provide for users
compared to central bank-issued fiat currencies, like the Euro or the US dollar, and to discuss how they
emerge from the underlying technology. For this purpose, the example of two crypto currencies is used in
this paper. The underlying technology of most crypto currencies is blockchain technology. A blockchain is
a decentralized database that is distributed in the network on a variety of computers. It is characterized by
the fact that its entries are summarized and stored in blocks.

TIMELINE OF RBI AND CRYPTOCURRENCY

• • In the last few years, India with a population that is over 1 billion strong has been
experiencing something of an economic renaissance. This was the degree to which the world
developed that the International Monetary Fund called it the fastest-growing developing economy.
Over 40 per cent ofthe country’s population has access to telecommunications and Internet
services. A country steepedin mystery, history and culture, when it comes to technological
advancement, it’s not one to fall behind either. Bitcoin and other cryptocurrencies traded
throughout the nation for many years now.

• • The cryptocurrencies story began in 2008 when a paper titled “Bitcoin: A Peer to Peer
Electronic Cash System” was published by the name of Satoshi Nakamoto by a single or group of
pseudonymous developers. The real network only took some time to launch with the first transfers
that took place in January 2009. A year later the first actual sale of an item using Bitcoin occurred
with a user swapping 10,000 Bitcoin for two pizzas in 2010, which for the first time attached a cash
value to the cryptocurrency.
• • By 2011, other cryptocurrencies started to emerge, all making their debut with Litecoin,
Namecoin and Swiftcoin. Meanwhile, the cryptocurrency Bitcoin that started it all began to be
criticized whenreports arose that it was being used on the so-called “dark web,” particularly on
sites like Silk Roadas a way of paying for felonious transactions. Over the next five years,
cryptocurrencies slowly gained momentum with an increased number of transactions and Bitcoin’s
valuation, the most common cryptocurrency soared from around $5 in early 2012 to about $1000
by the end of 2017.
• • Riding on the back of this popularity surge, multiple cryptocurrency exchanges started
operating inIndia between 2012 and 2017, offering much-needed depth and liquidity to the
cryptocurrency sector in India. Those included common exchange platforms like Zebpay,
Coinsecure, Unocoin, Koinex, Bitxoxo and Pocket Bits.
• • India’s RBI released a press release warning the public against virtual currency mining, like
Bitcoinmining back in 2013. With the price of shooting up cryptocurrency and their increasing
acceptance and usage by people outside the conventional cults, authorities around the world started
to consider
26
 this emerging development. RBI’s First Press Release warning consumers about Virtual Currency
Risks were:
• • No central bank funds Digital currencies.
• • Value is a question of speculation, not of an asset or a good.
• • RBI has not permitted trading or the use of virtual currencies.
• • RBI is in the process of reviewing the proposed regulatory structure for cryptocurrencies in
Indiaand will give further directions based on their review.
• • Prime Minister Narendra Modi announced a demonetization program initiated on November
8, 2016. The government’s decision to demonetize about 86 per cent of the country’s paper
currencysent shockwaves across India’s subcontinent. People with substantial cash reserves
wanted a new way to keep their capital without significant tax pressures and sundry policy
oversight. Buying massive orders of Bitcoin or other cryptocurrencies became standard practice
for others and then trading them at a later date. This meant that they circumvented what should
have been large taxation had they wanted to transfer their money into the financial sector.
• • Transaction volumes and acceptance of cryptocurrencies in India picked up in earnest just after
the demonetisation of high-value currency notes in November 2016, with the government focus on
digital payments contributing to alternatives to mainstream online banking such as cryptocurrencies
pushing their way into public consciousness. Indian cryptocurrency exchanges began to accumulate
customers at a much higher rate than pushed up demand on all Indian exchanges for cryptocurrency
transactions.
• • The 2016 demonetization policy may have sparked the adoption of cryptocurrencies among a
large portion of the population but soon realities started to surface that stifled the country’s market
development. Despite its large population, India contributes just 2 per cent of the overall global
blockchain industry capitalising. The small role that such a large economy plays can be attributed
tohigh cryptocurrency prices & government crackdown led by the RBI.
• • In November 2017, under the chairmanship of Shri Subhash Chandra Garg, Director,
Department ofEconomic Affairs, Ministry of Finance and composed of Shri Ajay Prakash Sawhney
(Director, Ministry of Electronics and Information Technology), Shri Ajay Tyagi (Chairman,
Securities and Exchange Board of India) and Shri B.P, the Government of India formed a high-level
Inter- Ministerial Committee. The Committee’s task was to research different problems relating to
virtual currencies and to recommend concrete steps that could be taken in conjunction with them. In
July 2019, this Committee submitted its opinion proposing a ban on private cryptography.
• • Both the RBI and the Ministry of Finance released press releases in December 2017 advising
the general public about the hazards and threats associated with cryptocurrencies, with the Ministry
of Finance Press Release noting that cryptocurrencies are like Ponzi schemes, and also announcing
that they are not currencies or coins. It should be noted here that until the end of March 2018, the
RBI and the Ministry of Finance had released numerous press releases on cryptocurrencies
warningpeople against their threats but none of them either took legal action or gave enforceable
guidance against cryptocurrencies.
• • On 1 February 2018: In the Union Budget Statement, Finance Minister Arun Jaitley said that
cryptocurrencies are not a legal tender and cannot be used as part of the payment systems. If anyone
does, the government will come down harshly and cryptocurrency won’t be permitted because they
can be used for illegal operation.
• • The RBI directed banks to stop servicing cryptocurrency exchanges before there was a clear
policyin effect. The circular dated 6 April 2018, in which the RBI prohibited commercial and
cooperativebanks, payment institutions, small financial institutions, NBFCs and payment system
providers from not only trading with virtual currencies themselves but also ordering them to avoid
offering services to all organizations dealing with virtual currencies. With immediate effect, all
licensed agencies have been barred from managing or delivering services to any person or
company dealingwith or settling virtual currencies.

27
• • The circular result was that cryptocurrency exchanges, which relied on conventional banking
networks to send and receive money to and from their customers, we’re unable to access any
financial services in India. It effectively crippled their business activities as turning cash into
cryptocurrency was an integral part of their activities and vice versa. And pure cryptocurrency
exchanges that did not trade with fiat currency were unable to carry out their daily activities without
access to banking facilities, such as paying for office rooms, workers wages, storage space,
distributor payments, etc.
• • RBI said the move was appropriate at the time to curb “ring-fencing” of the financial system
in theregion. It has also claimed that it is not appropriate to view Bitcoin and other
cryptocurrencies as currency because they are not made of metal or reside in intangible shape, nor
were they stamped by the government. The central bank ‘s 2018 notice sent fear to many local
startups and firms providing cryptocurrency trading services.
• • The Indian government has been debating “Banning the Cryptocurrency and Controlling the
Official Digital Currency Bill 2019.” The bill was introduced by the Interministerial Committee
(IMC), to research all facets of cryptocurrencies and make country recommendations. Former
finance secretary Subhash Chandra Garg headed the committee. The Indian crypto group claims the
bill is flawed and has been lobbying for the IMC guidelines to be re-evaluated by the Government.
Since then, Garg has left his government job.
• • In the face of the double impact of decreased trading rates and lack of access banking facilities,
the crypto-currency exchanges themselves find it difficult to maintain operations. In the face of
such anexistential danger, members of the Internet and Mobile Association of India (IMAI)
submitted a written petition to the Supreme Court on 15 May 2018 entitled The Internet and Mobile
Associationof India v. Reserve Bank of India.
• • On 4 March 2020, the Supreme Court lifted the ban imposed on 6 April 2018 by the RBI in the
caseentitled “Internet and Mobile Association of India (IAMAI) Vs Reserve Bank of India which
prohibited its regulated entities, such as banks, from trading in or facilitating banking transactions
in virtual currency (VC). Subsequently, the RBI published IAMAI ‘s circular request,
shareholders/founders of crypto-asset trading platforms, and real crypto-asset traders who were the
petitioners submitted before the SC. A three-judge Bench of the Supreme Court of India drafted a
Reserve Bank of India curricular,2018 which sought to prohibit banks and institutions from trading
in ‘virtual currencies’ — often referred to as cryptocurrencies, such as Bitcoin — and to provide
services to those engaged in trading in such currencies. The court order comes seven months after
an inter-ministerial committee has proposed banning cryptocurrencies, recommending instead to
introduce an official digital currency in the region.
• • On many counts, they contested the RBI circular. Through that circular, the RBI had
prohibited banks from extending a range of services to facilitate the handling of cryptocurrencies
by individuals and entities. The list of such services included ‘keeping accounts, registering,
trading,settling, clearing, lending against virtual tokens, accepting them as collateral, opening
exchange accounts and transferring/receiving money in accounts related to the purchase/sale of
VCs.
• • Justices Rohinton Nariman, Aniruddha Bose and V. Ramasubramanian set aside the 2018
RBI circular, saying, “The impugned rule can not be considered to be proportionate.” Their
rationalewas based on the fact that the RBI did not notice that virtual currency trading practices
did adversely affect the institutions it controlled. This was not banned in the region, even as
virtual currencies were not. “But the trade-in VCs and the working of VC exchanges are sent
by the impugned circular to comatose by disconnecting their lifeline namely, the link with the
normal banking system,” the order said.
28
 LAWS RELATED TO CRYPTOCURRENCY

Guidance should be taken from other jurisdictions that have already had extensive discussions and
workshops on this subject while evaluating the legal approach on cryptocurrency. The U.S. The Uniform
Law Commission has drafted legislation on the issue, the ‘Uniform Regulation of Virtual Currency
Businesses Act’ (‘ULC Model Law’), after reviewing the opinions of policymakers, members of the
public,non-profit groups and leading leaders of the industry. Crypto-assets are a common phenomenon
rather thana regional authority, thus, making global precedents easy to apply to the Indian context.

The Prevention of Money Laundering Act (PMLA) is the definitive Indian law on KYC/AML(Know
your Customer/ Application lifecycle management). Crypto-asset undertakings may be brought under the
PMLA as any entity that is a ‘bank company, financial institution, intermediary or a person carrying on a
designated business or profession.’ In any event, the RBI has the power to prescribe enhanced or simplified
measures under the Prevention of Money Laundering (Maintenance of Records) Rules to verify the identity
of the client. Consideration of the type of customer, corporate arrangement, complexity and importance of
the transactions concerning the potential risk of money laundering and terrorist funding.

The RBI will adopt a risk-based strategy and mitigate money laundering issues while preventing a full ban
on funding these businesses. This will require accountable and reputable businesses to work in a controlled
manner. The RBI Circular might not be appropriate for that approach. A new regulatory system will require
responsibilities for crypto-asset companies, such as financial adequacy, audits and monitoring. A proposed
licensing system will help to better safeguard customer safety.

Payment and Settlement System Act, 2007 – PSS Act Sections 10, 18, and 38 grant the RBI the authority
to create rules, directives, and guidance. That is, for example, the control the RBI uses to enforce the
Master Directive on Prepaid Payment Instruments. By this legislation, cryptocurrency trading sites can also
be put under a licensing regime under the PSS Act. The guidelines released by the Department of Banking
Regulation (DBR), RBI, on Know Your Customer (KYC)/Anti-Money Laundering (AML)/Combating
Terrorism Financing (CFT) shall extend mutatis mutandis to all agencies that issue PPIs and their
employees. This solution will require suitable exemptions in the RBI Circular, as RBI-regulated
organizations are currently totally barred from dealing with, or encouraging, virtual currency trading under
the circular.
Non-Banking Finance Companies (NBFC) – It puts crypto-asset market operation into a well-established
regulatory framework, which requires licenses, financial adequacy, KYC / AML laws, audits, reports and
other consumer-focused criteria. The business of an NBFC is defined in Section 45-I of the RBI Act. An
NBFC is defined as a variety of categories of ‘financial institutions’ excluding undertakings of mainly
buying or distributing products or delivering services and businesses collecting deposits as their main
business. This provision grants the RBI the authority to designate any class of entities as NFBCs, with the
prior approval of the Central Government. The RBI and the Central Government can, therefore, consider
NBFCs to be notifying entities carrying on ‘crypto-asset business activities’.
Consumer Protection Act, 2019 – Under Section 30A of the Consumer Protection Act, the National
Consumer Disputes Redressal Commission has the authority to make regulations “to provide for all matters
for which coverage is required or expedient to give effect to the provisions of this Act.” The Consumer
Protection Act 2019 protects consumers from ‘unfair trade practices,’ ‘deficiencies’ in facilities and
‘defects’ in goods. The word ‘unfair marketing practices’ requires a false or misleading advertisement.
29
Hence, the National Commission is open to developing laws (e.g., establishing a regulatory regime) taking
into account the crypto-asset industry’s specific consumer security issues. We suggest this path should also
be considered. As a result, customers have redress under the Consumer Protection Act, 2019 where every
crypto-asset company renders misrepresentations to customers or offers defective services.
Foreign Exchange Management Act,1999 – FEMA notes that ‘international currency’ is any currency
other than Indian currency. The currency of India is limited to any currency expressed in Indian rupees.
Consequently, if any crypto-asset can be used to “build a financial risk,” it will amount to “international
currency.” The RBI may control the drawing of these FEMA crypto-assets such that only ‘registered
persons’ can trade in foreign currency. This would have the benefit of having an increasingly well-
established regulatory framework for those concerned with these forms of crypto-assets since they will be
subject to all the protections that apply to approved persons. Since certain crypto-assets are called ‘goods’
under FEMA, the regulatory consequences under FEMA (e.g., export compliance) will flow accordingly.
However, the RBI did not explain the classification of crypto-assets under FEMA, which confused the
issue. The RBI can determine to amend the rules and guidelines on the sale and import of products to
clarify their operation concerning crypto-assets.
Information Technology Act, 2000 – Any providers of virtual currencies get information and details
about their customers. Platforms that allow credit card transactions in virtual currency must also recognize
these laws when processing information about credit cards. These data must be maintained and stored with
strict levels of confidentiality and security. Otherwise, the Virtual Currency provider can violate data
protection and security laws. The Information Technology Act reads with the Rules on Information
Technology, 2011 requires that all those responsible for using data follow strict rules. Such laws require the
fact and intent for which the information is gathered, the creation and dissemination of privacy policy and
the safeguarding of data. It establishes relatively strict cybersecurity standards for every organizational
entity managing confidential personal data, and the Central Government that, if it seems appropriate,
recommend clear additional steps for crypto-asset business activities. A new Data Privacy Bill is set to be
adopted, and when enacted, the same safety requirements will also be recommended under this Law.
Credit Information Companies Regulation Act – There is some suggestion that due to its tremendous
growth, the Credit Information Companies Regulation (CICRA) Act, which became law in India in 2005, is
likely to be extended to cryptocurrencies. Since cryptocurrency networks are ubiquitous for many activities
such as processing, distributing, redeeming, trading, and exchanging cryptocurrency values, the
specifications of the CICRA Act may be implemented. According to this Act, Indian individuals’ credit
details must be obtained in compliance with such legislation as set out in this Act. In the case of illegal data
theft, organizations which collect financial information may be held liable. Offshore financial transfers are
very common in today’s cyberspace, so taking into account the vast amount of persons involved with them,
these activities are useful for the security of the individual’s concerned personal data.
Prize chits and Chits Fund Act – Both the Prize Chits Act and the Chit Funds Act,1982 refer to the idea
of ‘monies’/’money’ and ‘cash’ in the terms ‘prize chit,’ ‘chit’ and ‘capital exchange scheme’ in their
meanings. Since crypto-assets are not technically ‘money’ under Indian law, these meanings must be
revised to include the word ‘valuable item’ (as used in Section 2(c) of the Prize Chits Act, so that, among
other valuable items, the aims of these Acts can be applied to the crypto-asset schemes.
Taxation laws – In the virtual currency business taxation legislation ranges from country to country. Many
countries place taxes on income produced by virtual currency transactions and some others have only
proposed taxation legislation. In India, where RBI notifies any such law, any trade therein would be subject
to the Foreign Exchange Management (FEMA) Act, 1999. Crypto-asset-related transaction taxes would fall
generally into two headings: Goods and Services Tax (GST), and Income Tax. The Crypto like bitcoins is
called a capital asset if bought for profit. Any income resulting from a bitcoin trade shall be treated as a
capital gain.

30
 IMPACT ON ECONOMY
The impact is of cryptocurrencies on the Indian economy is clearly depicted as the prices of cryptocurrency
market are now falling down. Indian government has made it clear with their stand of not providing a legal
status for cryptocurrency in India. The reason for this kind of a decision from government hails from first,
the challenge of monitoring the decentralized transactions in cryptocurrencies are difficult to trace which
could be advantageous for the hackers, criminals and also for terrorist activities. The second reason being
cryptocurrency market could be a leading competitor for the banking service industry.Cryptocurrency like
Bitcoin has become popular in India like other nations as the volume of Indian rupee being traded in
cryptocurrency have been at the highest post demonetisation. Researches shows that the volume generated
by the rupee dominated cryptocurrency is the third largest volume traded after American dollar and yen.
The demonetization policy of 2016 may have encouraged the implementation of cryptocurrencies amongst
a substantial share of the population but realities rapidly began to come out that have subdued the growth
of the market in the country. In spite of its enormous population, India only contributes two percent of the
whole global cryptocurrency market capitalization. Cryptocurrencies in Indian context portrays few Present
and future of Cryptocurrency in India .Presently there is no regulation in India for cryptocurrencies. The
absence of a regulation certain bitcoin exchanges such as Unocoin, Zebpay, etc have initiated their
operation in trading or cryptocurrencies with Know Your Customer (KYC) norms. The Reserve Bank of
India initially was against the trading of cryptocurrencies in India, however in the year 2014 RBI showed
its interest in block chain technology used by cryptocurrency to reduce the physical paper currency
circulation. In 2015, a financial stability report was published by RBI to identify the importance of private
blockchain. In 2016, ICICI bank with Emirates NBD (in terms of assets, one of the largest banking groups
in the Middle East) has executed transactions and remittance using block chain technology. Then in 2017, a
white paper has been issued by Institute for Development and Research in Banking Technology (IDRBT)
of RBI and also a pilot test was taken.

The Union finance minister in his Union Budget 2018 speech said, “The government does not consider
cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in
financing illegitimate activities or as part of the payment system.” However, the government has
recognized blockchain and said that a “distributed ledger system or the blockchain technology allows
organization of any chain of records or transactions, without the need of intermediaries. The government
will explore use of blockchain technology proactively for ushering in digital economy.”

Though government is taking a cautious approach on cryptocurrencies, it is bullish on the use of

blockchain. Crytocurrency industry believes that blockchain and crytptocurrencies have to go hand in hand.
But unless and until a decentralised system is formed, it is as good as keeping track. If only block chain
technology is to be accommodated that just builds up a centralised system which gives authority to a
person or a body to rectify and modify it.
Experts and observers in the country hope and predict that the government will regulate cryptocurrencies in
India in different stages. This favourable and positive signs give hopes to the industry of cryptocurrency.
Mean while private companies dealing in cryptocurrencies have set up an association called, the Digital
Assets and Blockchain foundation
which has been engaged in educating the public on the advantageous and investment avenues in
cryptocurrency by conducting security checks, identification documents issued by the government,
Permanent Account Numbers (PAN) orAadhaar IDs.

As the arrival of internet, cryptocurrency also has a tremendous growth potential. With the help of both
these factors of internet and blockchain technology, in future there are probabilities of virtual banks in
India. Hence to prove it on a positive note the Reserve Bank of India has taken initiatives to launch its own
31
cryptocurrency named as ‘ Lakshmi’.

India happens to be at a sweet spot of driving growth and innovation by landing a robust Digital Currency
Bill this year. In spite of the several rumors on a potential ban on crypto in India, there are multiple use
cases that could be considered by the policymakers who understand the true potential of leveraging crypto
and its impact on our economy.

Keeping in mind that our nation’s success in the past three decades has come from ITeS-based solutions, if
India is aiming to reach a $5 trillion economy, we cannot ignore the $1.7 trlllion market that exists for
cryptocurrencies. A forward-looking crypto policy can have a significant impact on improving our overall
financial infrastructure, help safeguard national security, deter financial frauds, strengthen our monetary
policy, attract international capital, create more job opportunities, and retain our tech talent to accelerate
technological development, thereby driving the nation towards becoming a global powerhouse.

We will need to prepare for the future and make adequate accommodations to safeguard our global
financial positioning. We also have to become ‘Atmanirbhar’ and reduce our dependency in situations like
the 2008 financial crisis or the 2020 COVID-19 crash. Cyberwarfare also poses a sizable threat in our
rapidly digitizing country. A decentralized financial platform could help India resolve such issues and have
an added advantage as these platform networks will not be blocked by any single state or country in times
of national distress or conflict. The other advantage here would be that if we could create our own social
networks on Ethereum, it would help build a decentralized ecosystem, which has its own positive effects

32
INVESTMENT IN CRYPTOCURRENCY

33
 INTRODUCTION
If the mega cryptocurrency has left you nervous, especially if you are an investor in digital coins like
Bitcoin or Ethereum, hold your nerves as there is a silver lining in the mayhem the crypto asset class
experienced last week.

While the short volatile period has widely been touted as a course correction (one Bitcoin is currently
hovering around $37,000 after touching a record high of nearly $60,000 just a couple of weeks ago),
industry experts are of the view that staying invested and thinking long-term is the thumb rule to follow for
crypto investors in the country.
India is increasingly adopting Bitcoin and other cryptocurrencies. According to reports, the country
currently has more than one crore crypto investors, and the number is significantly growing every day with
several domestic crypto exchanges operating in the country.
Despite the Reserve Bank of India (RBI) being wary of cryptocurrencies, Indians are making a beeline to
invest in the digital coins, touted as the most important asset class of the 21st century.
According to Rahul Pagidipati, CEO, ZebPay, Indian investors are learning to view Bitcoin as an asset
class that belongs in every long-term portfolio.
"Indians own less than 1 per cent of the world's Bitcoin. Being left behind will create a strategic
disadvantage for the Indian economy. In 2021, we expect more institutions and government officials to
recognise that we need to close the Bitcoin gap," said Pagidipati.
In April 2018, the RBI ordered financial institutions to severe ties with individuals or businesses dealing in
virtual currency such as Bitcoin. However, in March 2020, the Supreme Court allowed banks to continue
handling cryptocurrency transactions from traders and exchanges, giving a respite to the crypto investors In
March this year, Finance Minister Nirmala Sitharaman said that all windows on cryptocurrencies will not
be closed down, bringing further relief to the stakeholders.
Earlier this month, RBI Governor Shaktikanta Das said that the central bank has flagged major concerns
over cryptocurrency to the government.
Amid the uncertainties lies the fact that a 40 per cent dip in the Bitcoin price from its all-time high looks
dramatic but is normal in many volatile markets, including crypto, especially after such a large rally, say
industry players.
"Such corrections are mainly due to short-term traders taking profits. Investors should invest in education
first. Research the underlying value of Bitcoin, Ethereum, and other crypto assets as you might look at a
company's information before buying stocks," said Avinash Shekhar, Co-CEO of ZebPay.
Buyers are aggressively accumulating more and more Bitcoins. This is the driving factor that has propelled
the price growth of the digital coin.According to Prabhu Ram, Head-Industry Intelligence Group, CMR, if
one were to look back at the last decade, such volatility is consistent and on par for crypto.

"While over the short term, one may feel concerned, the long-term horizon view is positive. Going
forward, Bitcoin will continue to remain a small but significant investment in the investor portfolio," Ram
told IANS.

34
The key industry players feel that India is a tech and economic power that will emerge as a key player in
crypto and Blockchain adoption.
According to Sumit Gupta, CEO and co-founder of cryptocurrency exchange CoinDCX, cryptocurrency
has "now classified itself as a macro asset class for investments that can't be ignored.
"It will further lead greater mainstream acceptance than ever before," Gupta had told IANS.

INVESTORS IN CRYPTOCURRENCY

India has never been kind to cryptocurrencies, yet global investors have made huge bets on the country’s
digital coin ecosystem.
In November 2019, Binance, the world’s largest cryptocurrency exchange by trade volumes, acquired
WazirX, an Indian exchange, and last year, another Indian exchange, CoinDCX, secured financing from
Seychelles-based BitMEX and San Francisco-based giant Coinbase.

These investments happened despite the fact that for around two years starting April 2018, financial
institutions in India were restricted from providing services to crypto exchanges and their customers due to
a Reserve Bank of India order. This ban forced at least two crypto exchanges to shutter. And even now,
crypto exchanges in India are functioning without the services of banks.

But experts believe such investments are likely to continue coming into India.
“There is an increasing trend of foreign cryptocurrency exchanges investing in Indian cryptocurrency
exchanges. It is because India has a population of 139 crore that is predominantly young which is seen as
tech-savvy and more adaptable to crypto saving,” said Harish BV, co-Founder, Unocoin, which has a
userbase of 13 lakh in India. The median age of Indians is between 28 and 29 years.
In 2018, India’s then-finance minister Arun Jaitley had dealt a death blow to the future of cryptocurrencies
in the country. “The government does not recognise cryptocurrency as legal tender or coin and will take all
measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the
payments system,” Jaitley had said. Such remarks, coupled with the RBI ban, nearly drove the Indian
crypto ecosystem to death.

But in March 2020, when India’s apex court set aside RBI’s circular and allowed financial institutions to
engage in digital coin transactions, investors returned to the market with a vengeance.Within weeks of the
RBI ban lifting, trading volumes and new sign-ups on crypto exchanges went up multifold. Since then, the
volumes and userbase of these exchanges have expanded each month.

“We have been receiving investments consistently since our inception three years back,” said Sumit Gupta,
CEO and co-founder of CoinDCX. “Investors trust us despite the policy uncertainty. They have seen, how
we as a leading player in the industry have grown, and above all the Indian market does offer a lucrative
proposal for any investor.”
Experts assert that the demand for cryptocurrencies is booming and the untapped market potential is vast.

35
“While there is no official data on the number of crypto investors in India, exchanges like WazirX estimate
that 70 lakh-80 lakh investors are holding over $1 billion in crypto investments,” said Nicklas Nilsson,
senior analyst at GlobalData. “Industry estimates suggest a potential investor base of upwards of 10 crore.
The sheer size of the Indian market makes it an attractive option.
Besides the huge growth potential, what is driving investments into India is the huge cash reserves that
global crypto exchanges hold.
Rising revenues and investor financing mean that global giants are flush with cash, which they are using to
expand into newer markets and take advantage of various trends in the cryptocurrency space.

FUTURE IN CRYPTOCURRENCY

The use of Bitcoin and Ethereum could help strengthen India’s monetary policy and bridge the gap areas
that exist in the current fintech landscape. Crypto’s distributed ledger technology permits faster, direct
transactions by the users and also helps keep track of every digital transaction, which is far more advanced
and effective than existing protocols such as SWIFT. Secondly, Bitcoin can be used as an asset that
sovereigns use to complement their national digital currencies. It also reduces the burden on regulators by
allowing them to write programs that certify that financial actors are in complete compliance with the
regulators. We can avoid instances such as mortgage fraud and other fraudulent activities.

In other words, the evolution of Bitcoin and cryptocurrencies holds economic importance similar to the
internet in the 90s. The second unique crypto called Ethereum, which enabled smart contracts, gave birth to
an entire sector called decentralized finance (DeFi). DeFi is to build a multi-faceted financial system that
boosts the functionality and helps improve the legacy or the traditional financial system. DeFi alone has
created disruptions in the fintech space and, in the future, DeFi neo banks will play a pivotal role to
successfully bridge the gap between fintech and DeFi to attract new customers. Therefore, Blockchain-
based accounting holds the potential to empower regulators to monitor their activities and conduct risk
management seamlessly.

We are all aware of the devastating impact that COVID-19 has had on the Indian economy and the global
market at large. Despite this, crypto has been generating jobs across a variety of functions in India and
abroad. As of today, over 300 start-ups have generated tens of thousands of jobs and hundred-millions of
dollars in revenue and taxes. The ongoing development will inevitably lead to tech talent being engaged in
India. Indian youth seeks challenging opportunities to work on projects which are internationally
competitive and also help support improving our tech infrastructure.

In March 2020, two major events occurred which have boosted crypto adoption in India – i.e. the Supreme
Court’s historic verdict and the pandemic. WazirX completely caters to the Indian market and has seen
tremendous growth since then. Several Indians have lost jobs, and this has led them to invest in
cryptocurrency to earn a side income by becoming traders, technical analysts, or crypto influencers.
Globally, many institutional investors, including hedge funds in the US along with the giants like Square
and PayPal, are entering into crypto and are in a buying mode. This has also given a push to Bitcoin
adoption.
.

36
DATA ANALYSIS AND
INTERPRETATION

37
 DATA ANALYSIS.

Analysis of data is a process of inspecting, cleaning, transforming, and modelling data with the goal of

discovering useful information, suggesting conclusion, and supporting decision making.

The process of evaluating data using analytical and logic reasoning to examine each component of data

provided… Data from various source is gathered, reviewed and then analysed to form some sort of finding

or conclusion.

Why do we analyze data?

The purpose of analyzing data is to get usable and useful information. The analysis, irrespective of whether

data is quantitative or qualitative, may:

• • Describe and summarize the data.

• • Identify relationship between variables.

• • Compare variables.

• • Identify difference between variables.

• • Forecast outcomes.

38
The research method used was survey through questionnaire.
A sample size of 50 people was taken.
These are the questions asked in the survey questionnaire and the results are as follows-

Age -

Interpretation – Almost 95 % of the people in the sample were between the age
of 15-30 years .

This states that most of the people were from the young generation.

39
Occupation -

40
Interpretation - out of the sample of 50 most of them were students and some
working employees.

Small part of the sample was from the category of business ,professional and
others.

Do you own cryptocurrency?

41
Interpretation – As most of the people from the sample were learning students
majority of them did not own any type of cryptocurrency, yet there are some
who did own cryptocurrency.

42
How much ,if at all
have you heard
or read about

cryptocurrency like bitcoin and ethereum?

43
Interpretation – Majority of the people from the sample are aware about the
concept of cryptocurrency and have good knowledge about it as most of them
are learning students and people of the current generation.

How likely are you to invest in cryptocurrency this year ?

44
Interpretation- most of the people are somewhat likely to invest in
cryptocurrency this year and considering the decision of buying cryptocurrency.

If you are a regular investor or wamt to start investing ,does the introduction of cryptocurrency have
impacted your decision Of investment?

45
Interpretation - the introduction of cryptocurrency have impacted differently
on different people regarding their investment decisions .

46
Cryptocurrency is still in its infancy stage and may undergo many changes in the near future which
makes it extremely volatile. How likely would this affect your decision to use cryptocurrency?

Interpretation – the extreme volatile nature of cryptocurrency have affected the

decision of investment in cryptocurrency of most of the people.

47
Unlike other currencies ,cryptocurrency requires much less fees to operate. Would this increase your
interest in using cryptocurrency

Interpretation – on knowing about the low cost investment requirements of

cryptocurrency have increased the interest in investment in cryptocurrency of
majority of the people.

48
In your opinion which is more risky ,investing in stock market or investing in cryptocurrency ?

Interpretation –majority of the people believe that cryptocurrency is more

riskier to invest in than stock market.

49
Which is more
profitable , investing in

cryptocurrency or investing in stock market ?

50
Interpretation - the profitability comparison of cryptocurrency does not seem to
give concrete biased results ,rather both of then are considered profitable
according to the survey results.

Cryptocurrency have no tangible form,does that diminish the value that you perceive about
cryptocurrency ?

51
Interpretation – the intangibility of cryptocurrency did not affect strongly to
majority of the people and had mixed results.

If
cryptocurrency providers created tangible coins or notes for its users with banks and ATMs readily
available but remained non government regulated . would this increase your intrest in
cryptocurrency ?

52
Interpretation- most of the people are unsure about their interest in
cryptocurrency even if it gets in tangible form and some of them are definite
about their increment in interest due to cryptocurrency’s tangibility.

Cryptocurrency is Non government regulated which offers users more freedom . would this increase
your interest in using cryptocurrency ?

53
Interpretation – Freedom in investment and less government regualtions
attracts people to invest in cryptocurrency and increase their interest.

If cryptocurrency is government regulated but remained intangible , would this increase your
interest in using cryptocurrency ?

54
Interpretation – there is no concrete or strong opinion about government
regulation on cryptocurrency impact on people of the sample.

How do you think cryptocurrency have impacted the economy of India?

55
Interpretation – on a scale from 1-5 where 1 being most negatively impacted
and 5 being the most positively impacted, the results are mostly neutral and
indicate, cryptocurrency have not drastically impacted the economy of India.

56
In five years, do you think cryptocurrency will be worth more or less than it is today ?

Interpretation – 80% of the people believe that in the next five years
cryptocurrency will be worth significantly more than it is today.

57
 Hypothesis analysis

Testing of Hypothesis

Hypothesis 1-

H0- There is positive impact of cryptocurrency on Indian economy.

H1-There is negative impact of cryptocurrency on Indian economy.

According to the research analysis here H0 stands true and verified as cryptocurrency have positively
impacted the economy of India . though there are no drastic changes as such but still a lot of scope for a
good effect of cryptocurrency market in India.
H1 stands nullified as per the research as there do not seem any harsh negative impact of cryptocurrency on
the economy of India and currently seems no scope for the same.

Hypothesis 2

H0 - cryptocurrencies have significantly impacted the investment decisions of investors .

H1- cryptocurrencies have least impact on investment decisions of Investors .

According to the data collected and research analysis ,here H0stands true and verified as the introduction of
cryptocurrency and changes in its nature have clearly shown significant impact on the investment decisions
of the investors .

H1 stands nullified as the statement that cryptocurrency had least impact on investors stands to be proven
false clearly as per the data collected.

58
 CONCLUSION

Crypto-currency is such an invention which has become a global phenomenon. Earlier RBI warned the
Indians from using cryptocurrency that to be associated with money laundering and terrorist financing.
However, cryptocurrency is a modern technology and a tool which needs to look forward for. Even though
there has been no regulatory response from the Indian government, the number of investors in
cryptocurrency is increasing rather swiftly over the last few years. Indian government should take
responsible steps now to regulate such currency as its user in India is rapidly growing. Future of
cryptocurrency in India looks promising and there is ray of hope.

Crypto currencies could provide a significant benefit by overcoming the lack of social trust and by
increasing the access to financial services (Nakamoto, 2008) as they can be considered as a medium to
support the growth process in developing countries by increasing financial inclusion, providing a better
traceability of funds and to help people to escape poverty .

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 Bibliography

www.wikipedia.com
www.investopedia.com
https://www.analyticsinsight.net
www.slideshare.net
www.blog.ipleaders.in
www.financialexpress.com
https://docs.google.com/forms
www.academia.edu
www.scroll.in
www.economictimes.indiatimes.com

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