Starting to search for information about the state of the global cryptocurrency market, you will find that no report and no study is complete without mentioning India. Pakistan’s closest neighbor, which we have already written about earlier, is one of those countries where digital currencies have been regularly becoming the “heroes” of news that is discussed far beyond the borders of this country for many years.
Back in 2013, India became the first state whose government issued an official circular concerning cryptocurrencies and exchanges trading them. In this document, the Central Bank warned users about the potential risks associated with the use of virtual money.
In 2016, an experiment conducted by the Government of India on partial demonetization of the economy gave impetus to the development of crypto investments.
In 2018, the Central Council for Digital Taxation (CBDT) submitted to the Ministry of Finance a draft scheme for banning virtual currencies, and about a month later issued another circular prohibiting banks and payment system providers from dealing with virtual currencies and providing services to virtual currency exchanges. This dealt a heavy blow to the Indian crypto market, but could not stop the process of penetration of digital currencies into the economy and the lives of ordinary citizens.
In January 2021, the government of India announced that it would introduce a bill on the creation of a sovereign digital currency, and in November of the same year, the Blockchain and Crypto Assets Council of India (BACC) concluded that digital assets do not need to be banned, but regulated. The ban on the use of cryptocurrencies in the country was practically lifted, after which a real boom in digital currencies began.
What is happening with cryptocurrencies in India now?
At the time of writing this article, cryptocurrencies have not become legal tender in India, although there has been talk about this for almost two years. The official draft law on cryptocurrencies and regulation of digital assets, announced in early 2022, allows “certain exceptions” for “financial instruments operating in transfer and trading systems operating in a blockchain environment.”
Ajay Seth, the Minister of Economic Affairs of India, confirmed that the government is “already ready enough” to transform the cryptocurrency landscape in the country, but for this to happen, the government needs to reach a global consensus between government agencies and beznes.
Speaking with a report on the formation of the budget for 2022-2023, Indian Finance Minister Nirmala Sitharaman made an important announcement in which she stated that the crypto asset industry in the country should enter the tax space, and the digital rupee could be put into circulation as early as fiscal year 2023. After fears and unwillingness to accept cryptocurrency, the Indian government finally decided to open up to the virtual form of money. And this is quite a logical step that ordinary users of the country’s digital finance have been waiting for since 2009.
Over the past 3 years, there has been an unprecedented growth of crypto investors in India. According to a report by the Economic Times, about 28 million Indians have cryptocurrencies, as well as regularly use transfer and exchange services. According to a global study by Chainalysis, the percentage of cryptocurrency transactions in India has grown by more than 800% over the past year alone.
In 2020-2021, investments in cryptocurrency in India increased from $923 million in April 2020 to almost $6.6 billion in May 2021. The country’s population of 1.4 billion people consists of young people with a growing well-educated middle class. Combined with a less developed traditional financial system, this has led to the fact that the number of users from India only officially registered on cryptocurrency exchanges is more than 18 million people, with a total amount of assets worth about $ 6 billion.
India is a country that is sensitive to all current trends in the digital finance markets. And therefore, for the residents of this country, cryptocurrencies are just an invention that can become an incentive for the transformation of the economy, but also a technology that can be used in a variety of fields. At the current stage of development of the crypto market, the government of India only needs to create conditions for a secure and regulated digital environment.
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