Indians are holding on to their cryptos, amidst all the uncertainty — here is why

• In India, crypto exchanges have asked the government to consider SEBI as a viable cryptocurrency regulator.
• Coins like Bitcoin and Ethereum are an asset and do not come under the purview of the RBI.
• Cryptocurrencies cannot be considered a currency, as the conventional definition says a currency has to be backed by a state.
• The government plans to set up a panel to study crypto regulations, the use of blockchain, and its long-term repercussions.

Despite uncertainties around regulations and the legality of cryptocurrency in India, enthusiasts continue to hold onto them in large numbers. While the government decides its stance, we spoke to investors who’re already in the game.

“I invested in Dogecoin when it had its first correction in April end. The sole reason was its first jump was significant, giving me hopes that more shall follow. I held onto it for a few weeks and exited at the next wave.” Dilesh Tanna, a 23-year-old investor from Mumbai told Business Insider.

But exit doesn’t mean he liquidated the coins to rupees. He’s holding Bitcoin and intends to keep it as long as possible.

On the other hand, Suraj Pawar bought Bitcoin in 2017 and he is sitting on a fortune by holding onto them. He was an engineering student back then and was fascinated by what cryptocurrencies promised. He’s held onto them ever since.

The traditional long-term and short-term definitions in the crypto world are quite different. For most, long-term often means infinite. There’s no set goal and they’re invested in the future.

Cryptocurrencies have always promoted one thing — a decentralised blockchain network that's free of state-backed interference. Bitcoin was founded in 2009 and intended to take on fiat currencies, as the latter is often considered old and inefficient. The word cryptocurrency literally means cryptographic currency. So, why are crypto exchanges asking governments to consider the instrument an investment, not a currency?

“I consider these coins to be an investment. I keep changing my coin holding depending on the trends to stay relevant. I’ve also never seen an opportunity to spend them on the ground. So, from my point of view, it’s an asset that I’m willing to hold based on my risk appetite. It’s just like the stock exchange, where you keep shuffling various stocks based on analysis,” Tanna added.

In India, crypto exchanges have asked the government to consider SEBI (Securities and Exchange Board of India) as a viable cryptocurrency regulator. The prime argument is that coins like Bitcoin and Ethereum are an asset and do not come under the purview of the RBI (Reserve Bank of India). The RBI manages the rupee and looks after the macro well-being of India's banking institutions.

SEBI manages the stock exchanges and is well-versed with exchanges, asset management, and always has the investor's interest in mind. It's also hard to decide whether cryptos are a commodity or equity because if it replaces gold, it's a commodity. Investors are confident that cryptocurrencies have potential from a technology point of view and can co-exist with the existing financial system. Once integrated, the returns shall be equivalent to equity since investors were invested in the larger picture.

"For the time being, cryptocurrencies are treated only as an investment vehicle as they promise to solve a great use case. We expect cryptos to step up and scale in the near future and slowly start being adopted as currencies,” Vikram Subburaj, co-founder and chief executive officer (CEO) of Giottus Cryptocurrency Exchange, told Business Insider.

Cryptocurrencies cannot be considered a currency now, as the conventional definition says a currency has to be backed by a state. Most importantly, the end-user has confined options to purchase something via Bitcoin or Dogecoin. While cryptocurrency still has a community of niche businesses that accept it (like NFTs), they’re a minority. Unless one can use the tokens as a legal tender on-ground, it cannot be called a currency.

"Cryptos are volatile right now because of speculation and folks like Elon Musk [of Tesla]. The fundamental point is, Bitcoin may be the future or maybe not. But blockchain as a concept is here to stay, and that's what we're investing in," Dilesh reaffirmed.

A similar experience was narrated by a handful of other crypto enthusiasts Business Insider spoke to. Buying a crypto coin is a long-term investment hoping that it'll soon become a successful currency one day. Nischal Shetty, the founder and CEO of crypto exchange WazirX has often said that crypto is a new technology and it'll take time to regulate it. Even ride-hailing app Uber was in a similar predicament not long ago.

Blockchain reliability makes sense as countries consider floating a CBDC (Central Bank Digital Currency) and joining the crypto-mania. According to an ET report, the government plans to set up a panel to study crypto regulations, the use of blockchain, and its long-term repercussions.

Hence, it’s clear that cryptocurrencies are perceived as an investment medium and shall take time to mature into a full-fledged currency. It may be able to become an alternative in countries with weak economies, but the healthy ones are indeed out of question for now.


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