Why Is India’s Cryptocurrency Ecosystem Glad It Was Ignored In The Country’s Budget?

The finance minister of India, Nirmala Sitharaman entirely overlooked cryptocurrencies in the budget 2021. In her almost two-hour-long budget speech on February 1, she didn’t include anything related to cryptocurrency. But, rather than feeling left out, the digital currency ecosystem of the country is actually breathing a sigh of relief.

The sense of respite comes as the government of India is presently thinking of a ban on cryptocurrencies that some were anticipating might be declared in the 2021 budget; however, nothing really happened.

As per the Lok Sabha (lower house of parliament) bulletin last week, the Modi government is planning to introduce a bill that will prohibit every private cryptocurrency in India and create an official digital currency that will be issued by the Reserve Bank of India (RBI).

“Cryptocurrency is related to finance and since they were not mentioned in this year’s budget is a clear indication that the government is not at all in a hurry to make any decision. In addition to this, I do not really think the government will ever introduce or pass a bill without taking stakeholders’ views into account,” said Nischal Shetty, founder of India’s most popular cryptocurrency exchange WazirX.

Uncertainty Over Cryptocurrency In India

It is no news that cryptocurrencies have been getting traction in India over the recent months as a good number of Indians view them as the best alternative to buy gold. Trade volumes at various crypto exchanges in the country have been increasing like never before.

Need to mention, given this new found love, before the presentation of budget 2021, #IndiaWantsCrypto was trending on Twitter.

But assumptions that the budget will probably ban cryptocurrencies did cause a lot of chaos in the Indian market. “Last week the price of bitcoin had dropped by 8-9 percent,” said Shetty. “However, following the budget, it has improved  on our exchange.” Truth be told, this is in contrast to the global scenario where the price of bitcoin surged on January 29 after Tesla chief Elon Musk, one of the richest men in the world,  added #Bitcoin to his Twitter bio as well as said he was a supporter.

The reaction of investors in India is not baseless because the country has a history of cracking down on cryptocurrencies. In the year 2018, the Reserve Bank of India had asked all banks across the country to cut ties with entities dealing in cryptocurrency that in turn wreaked havoc for the ecosystem with a number of exchanges shutting shop. And, the matter took almost two years as well as a serious legal fight to get solved.