Here’s why DeFi will future-proof India’s crypto ecosystem

After less than a year of Indian cryptocurrency users enjoying unfettered access to the cryptocurrency markets, it now looks likely that the authorities will intervene once again.

The Indian government is set to push through the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 in the latest budget session of Parliament. Although the Bill’s exact contents have yet to be made public, Bloomberg reports that a senior official from the Finance Ministry has indicated that all forms of cryptocurrency could be banned through the new law.

The move is sure to be a blow to India’s nascent cryptocurrency sector. In 2018, the Reserve Bank of India had effectively taken a similar measure by asking all banks and regulated financial institutions to cease dealing with cryptocurrency firms. The net effect was that cryptocurrency trading became limited to peer-to-peer sites, which negated any dependence on banking services. In March 2020, the Supreme Court of India overturned the ban, and a flourishing market for cryptocurrency firms has emerged in the meantime. One report states that cryptocurrency trading in India increased as much as 500% following the Supreme Court ruling.

One thing is clear – the ban won’t be welcomed by many. There’s currently a high-profile and well-supported Twitter campaign led by members of the Indian cryptocurrency scene, assembling under the hashtag #Indiawantsbitcoin. Former Coinbase CTO Balaji Srinivasan recently stated his belief that banning cryptocurrencies is akin to banning the internet and is a mistake that could cost the Indian economy trillions of dollars.

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