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India may feel vindicated for being cynical towards cryptocurrencies

India may feel vindicated for being cynical towards cryptocurrencies

India may feel vindicated for being cynical towards cryptocurrencies
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By Asmita Pant  Dec 4, 2022 6:29:43 PM IST (Updated)

The government and RBI has always faced backlash for its stance on crypto. But, it’s their vigilant attitude that has helped the country dodge the downfall.

Cryptocurrency markets have witnessed losses worldwide but the government and Reserve Bank of India’s cautious approach has helped India stay relatively unharmed. The country’s central bank, RBI has always rejected the idea of recognising cryptocurrencies and so has the government.

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The crash of Sam Bankman-Fried's FTX -– one of the leading global crypto exchanges –- was the biggest trigger for the industry’s recent plunge. The firm filed for bankruptcy leaving investors and depositors poorer by billions of dollars. The collapse of a credible player such as FTX throws light on the vulnerability of and fault lines of unregulated crypto markets.
Such crashes typically lessen investor confidence and that obviously lead to more similar instances in the industry.
But the much criticised cautious and careful approach of the government and RBI has saved India from such a massive economic turmoil. Indian investors were saved from losing millions after FTX’s crash and subsequent market meltdown.
On various occasions, Prime Minister Narendra Modi has spoken about the need to regularise crypto and always sought global cooperation for putting a proper system in place. On one such occasion, he said that democratic nations need to work together to ensure that cryptocurrency does not fall in the wrong hands. Not just the Prime Minister, but Finance Minister Nirmala Sitharaman has also been wary of the asset.
However, the government has always faced backlash for its stance on crypto. But, it’s the vigilant attitude of the RBI and the government that has helped country dodge the downfall. As per industry estimates, only three percent of Indian investors are exposed to crypto assets.
"After the new taxation rules came into place, most exchanges have been auditing even more frequently to ensure that the users' funds are safe, thereby improving transparency. Also, very few exchanges in India had FTX listed on their platforms, which has reduced exposure to FTX's native token. For these reasons, Indian investors have suffered fewer losses than the US and Europe," said Edul Patel CEO and Co Founder of Mudrex.
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