Mainstream Bitcoin Adoption in India is Imminent Amidst Financial Instability
Following China, South Korea and Japan, India will likely emerge as a major bitcoin exchange market in the upcoming months.
Since early 2017, the Indian government has expressed its optimism towards the rapidly growing Indian bitcoin industry and exchange market. Amidst financial instability caused by the demonetization of 500 and 1,000 rupee banknotes and the shortage of cash in tens of thousands of ATMs across the country, the general public is adopting bitcoin as the alternative financial network, a safe haven asset and a digital currency.
An increasing number of merchants have started to accept and utilize bitcoin as a digital currency and mainstream media outlets have begun to offer extensive coverage on bitcoin alongside reserve currencies and precious metals such as the US dollar and gold.
Most recently, some of the largest mainstream news networks and newspapers including the Hindustan Times and Times of India have started to provide regular coverage of bitcoin, its technical intricacies, its purpose, rising demand from global investors and advantages over existing banking systems and financial networks.
As a result, Indian bitcoin exchanges including the big three trading platforms Unocoin, Coinsecure and Zebpay have experienced exponential increase in their trading volumes and user base. Particularly, Zebpay revealed on May 15 that the company reached a major milestone in achieving 500,000 mobile downloads for its mobile application.
Although the government has decided to regulate the Indian bitcoin industry and legalize the digital currency, at the moment, bitcoin exchanges and trading platforms such as the abovementioned Zebpay, Coinsecure and Unocoin are self-regulating their platforms with their independent Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.
Despite the lack of regulatory frameworks for the bitcoin exchange market in India, local exchanges have focused on developing and implementing efficient KYC and AML systems which the government and law enforcement can rely on at times of need.
For instance on May 1, Indian bitcoin exchanges including Zebpay assisted the Pune Cyber Crime department to recover approximately $10 million stolen in a bank heist. Almost immediately after a hacking group stole millions of dollars from a newly deployed banking system, hackers used that money to purchase bitcoin in platforms including Zebpay. With its thorough KYC and AML systems, Zebpay was able to track down the identities of the hackers and restore the $10 million for the local bank.
Sandeep Goenka, Zebpay co-founder, explained:
“Zebpay helped the Pune Cyber Crime department to get back the bitcoins purchased by the accused. This was possible because we follow KYC for all users. The Cybercrime office then gave orders to sell the bitcoins to recover the money. These bitcoins were also sold on Zebpay.”
The efforts of Zebpay and other exchanges have ultimately convinced the Indian government to regulate bitcoin. On June 20, CNBC India revealed that the Indian government will officially legalize bitcoin within 2017 after drafting several bills and regulatory frameworks to facilitate the rapid growth of the bitcoin industry and exchange market in India.
Due to mainstream media coverage, rising popularity amongst investors and the exponential growth of bitcoin trading platforms, bitcoin has already begun to gain mainstream adoption in India. The legalization of bitcoin by the Indian government will further increase the demand and interest toward bitcoin.