Cryptocurrencies are a hot new topic among Indians. While many Indian citizens have invested in cryptocurrencies, the absence of a robust framework leaves investors open to high risks.
Despite the blitzkrieg by cryptocurrencies and platforms, especially during the recently concluded T20 Cricket World Cup, as many as 71% of Indians have very low or zero trust in cryptocurrencies, reveals a survey conducted by LocalCircles. The study finds that 87% of the respondent families do not have anyone trading or investing in cryptocurrencies.
As per the survey, over one in two Indians does not want cryptocurrencies legalised in India but for the Reserve Bank of India (RBI) to roll out the country’s digital currency, while 76% want cryptocurrency ads to be put on hold until there is regulatory clarity.
A study of citizens says Indians currently have low levels of trust in international cryptocurrencies and 51% want India to roll out its digital currency. As per the survey, 54% of Indians do not want the government to legalise cryptocurrencies but tax them like a digital asset held abroad, while 26% say they should be legalised and then taxed in India.
As per reports about the meeting chaired by prime minister (PM) Narendra Modi in mid-November, it was discussed how misleading advertisements are luring many young investors in an unregulated space.
While the profits are highlighted on all platforms and even endorsed by celebrities, the losses barely make the news. Industry experts claim that India’s digital currency market is estimated to have grown to $6.6 billion in April 2021 from $923 million in April 2020.
However, RBI governor Shaktikanta Das has raised doubt that India’s number of crypto users is exaggerated. He stated that roughly 70%-80% of users only have small balances of Rs500 to Rs1,000. He also warned against the use of cryptocurrency, highlighting the risk it poses to macro-economic and financial stability.
The Securities and Exchange Board of India (SEBI) has also voiced its concern about the unregulated growth of cryptocurrencies in India, keeping vulnerable retailers and investors in mind.
A meeting chaired by PM Modi early last week discussed the future of cryptocurrency amid concerns that it can be used as an avenue for money laundering and financing terror.
Further, a memo outlining the summary of the meeting showed the government’s displeasure over misleading advertisements by the crypto industry promising large profits. Following this, multiple crypto players have decided to halt new advertisements until regulations are set.
Recently, investors lost millions of dollars in a scam related to Squid coin, created by an anonymous developer. The coin hit a market value of $30 million before the developers shut it down, causing the value of the coin to plummet to zero.
Taking cognisance of such issues, the first question in the LocalCircles study asked citizens about the level of trust in cryptocurrencies. In response, only 1% said they have ‘high’ trust in cryptocurrency. About 12% said they have an ‘average’ trust, and 22% said it is ‘low’.
As many as 49% of Indians studied say they have ‘zero or do not trust at all’, while 16% did not have an opinion. On an aggregate basis, 71% of Indians studied have low or zero trust in cryptocurrencies, while 1% have high trust. This question in the study received 9,174 responses.
87% Indian families do not have anyone trading or investing in cryptocurrencies
The RBI governor believes that the number of crypto investors in India is exaggerated, as is the amount invested. The next question in the study attempted to gauge the penetration of cryptocurrency amongst the masses and asked, “Are you or someone in your family trading or investing in Cryptocurrencies?”
In response, 4% said “yes, multiple members” and 7% said “yes, just one individual” trade or invest in cryptocurrencies, while 2% could not say. On an aggregate basis, 87% of Indian families do not have anyone trading or investing in cryptocurrencies. This question in the study received 10,117 responses.
54% of Indians want the government to tax it like a digital asset held abroad
With the latest development of government listing of “The Cryptocurrency and Regulation of Official Digital Currency Bill 2021”, which is to be presented in the parliament’s winter session, that seeks to prohibit all private cryptocurrencies in India, the study asked citizens about how India should handle cryptocurrencies from a regulatory standpoint.
In response, 26% say, “it should legalise these currencies and tax them in India”. A whopping 54%, however, said “it should not legalise but tax it like a digital asset held in a foreign country”, and 20% did not have an opinion.
Overall, more than twice as many people want cryptocurrencies should not be legalised in India from a regulatory standpoint. This question in the study received 8,717 responses.
74% Indians believe cryptocurrency advertisements are not highlighting the risks
In the recent T-20 cricket world cup, one in three advertisements was of cryptocurrencies, with platforms and exchanges trying to attract viewers. The next question asked citizens how effective they found the recent cryptocurrency advertisements in highlighting the risks involved.
In response, 52% of citizens said they did it “completely ineffectively,” 22% said “quite ineffectively,” and 6% said, “somewhat effectively.”
Only 5% of citizens believed that cryptocurrency advertisements highlight the risks involved effectively, while 15% did not have an opinion. On an aggregate basis, 74% of Indians believe cryptocurrency advertisements do not highlight the risks involved effectively. This question in the study received 9,942 responses.
76% want advertising to be on hold till regulations are ready
Cryptocurrencies are currently not regulated in India. The next question asked citizens about how cryptocurrency advertisements should work until the government or RBI comes up with regulation.
In response, 15% of citizens believed that a government body should approve all advertisements like the ministries of information and broadcasting (MIB) or ministry of consumer affairs and RBI. Only 5% of citizens favoured continuing cryptocurrency advertisements as is while the majority of citizens, 76% said: “all advertisements should be put on hold till the regulations are ready.” This question in the study received 9,277 responses.
51% Indians support India rolling out its own digital currency or cryptocurrency
The “Cryptocurrency and Regulation of Official Digital Currency Bill 2021” to be presented in the parliament’s winter session seeks to create a facilitative framework for the creation of the official digital currency to be issued by the RBI.
The final question in the study asked if India should roll out its own digital currency or cryptocurrency which is managed by RBI. In response, the majority of 51% said ‘Yes’, 26% said ‘No’, and 23% did not have an opinion. This question in the study received 9,224 responses.
LocalCircles says, in addition to RBI and the government, activists and many citizens have also been raising concerns about crypto platforms targeting youngsters through misleading advertisements, promising high returns and highlighting how quickly upper and upper-middle classes have gotten into trading in cryptocurrencies in the past 18 months as well as a severe risk of middle- and lower-income classes getting lured into it.
“We will share the findings of this study with key stakeholders in the Union government, RBI and all members of Parliament (MPs) so public feedback is kept at the forefront as the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 is taken up for discussion and approval in the parliament in a few weeks,” it added.