Indian Finance Minister Nirmala Sitharaman completely ignored cryptocurrencies in her nearly two-hour budget speech yesterday (February 1st). But instead of feeling left out, the country’s digital currency ecosystem breathes a sigh of relief.
The feeling of calm comes as the Indian government is currently considering a ban on cryptocurrencies that some had expected could be announced as part of the budget.
According to the Lok Sabha (Lower House of Parliament) bulletin last week, the Modi government plans to pass a law banning all private cryptocurrencies in India and creating an official digital currency issued by the Reserve Bank of India (RBI) .
“Cryptocurrencies are related to finance and the fact that they were not mentioned in the budget shows that the government is in no hurry to make a decision. I also don’t think the government will pass a law without considering the views of stakeholders, ”said Nischal Shetty, founder of India’s most popular cryptocurrency exchange, WazirX.
Uncertainty about cryptocurrency in India
Cryptocurrencies have been gaining traction in India in recent months as many Indians view them as an alternative to buying gold. The trading volume on several crypto exchanges in the country has increased.
Given this newfound love, #IndiaWantsCrypto was trending ahead of budget on Twitter.
However, the expectation that the budget would ban cryptocurrencies caused unrest in the market. “Last week the price of Bitcoin was down 8-9%,” Shetty said. “But according to the budget, our exchange has recovered.” This is in contrast to the global scenario where the price of Bitcoin rose on January 29th after Tesla boss Elon Musk, one of the richest men in the world, added #Bitcoin to his Twitter bio and declared he was a supporter.
The reaction from Indian investors is not unfounded as the country has cracked down on cryptocurrencies in the past. In 2018, the RBI asked all banks in the country to cut ties with companies dealing with cryptocurrency, which devastated the ecosystem as many exchanges shut down. The matter took nearly two years and an intense legal battle to resolve.