TOKYO -- After India's Supreme Court reached a landmark decision in early March that essentially lifted a two-year-old ban on cryptocurrency transactions, the country has seen numerous homegrown and foreign cryptocurrency businesses revive or start up from scratch, like a spring awakening after a long period of hibernation.
But many of the entrepreneurs and investors are pushing ahead with their bets despite fears of another complete ban or severe restrictions on cryptocurrency trading, which bureaucrats and cabinet members are said to be discussing. Local media reports say the government aims to submit a bill to parliament before the November holiday season, which, when enacted, will regulate or possibly ban cryptocurrencies.
Undeterred, Indian investors are rushing back into the cryptocurrency trading scene.
According to UsefulTulips.org, a cryptocurrency information website, combined monthly trading volume between the Indian rupee and Bitcoin, the biggest cryptocurrency by market capitalization, has nearly doubled between March and July at two major peer-to-peer crypto asset trading platforms --- LocalBitcoins of Finland and Paxful of the U.S. Their total volume in March was equivalent to $8.14 million. By July the figure had reached $16.26 million.
Those platforms were used only by those living outside India before the Supreme Court ruling. Afterward, residents of India were allowed to trade.
Homegrown trading platforms also reopened to local clients soon after the court decision, which stated that the regulation put in place by the Reserve Bank of India, the central bank, in April 2018 prohibiting financial institutions from dealing with entities and individuals involved in cryptocurrency transactions was unconstitutional.
According to another information site, CoinMarketCap, two major Indian crypto exchanges -- CoinDCX and WazirX, both based in Mumbai -- are seeing monthly trading volume of roughly $8 million to $12 million. That is minuscule compared with daily volumes of $100 million to $15 billion for the worlds's major crypto exchanges. Nevertheless the figures highlight the rapid return of local investors.
CoinDCX has quickly attracted fresh investments from a number of global investors, including Bain Capital of the U.S. It raised a total $5.5 million in two rounds in March and May, following the court ruling.
"The cryptocurrency industry in India is finally getting the recognition it deserves from global corporations and investors," said Sumit Gupta, CoinDCX's co-founder and chief executive, in a blog post announcing the May fundraising deal. Gupta described the investments as "a shot of confidence" in the startup's vision of "bringing the crypto asset class to a largely untapped Indian market."
The world's largest crypto exchange network, Binance of Malta, acquired WazirX last November, perhaps anticipating India's ban on cryptocurrency trading would be lifted soon. The two exchanges have interconnected their systems so that each exchange's account holders can log on to the other's platform and trade.
There are also newly emerging crypto startups in the country. TradeHorn Exchange and BitPolo Technologies, both based in Bangalore, launched exchanges in June. They both target newcomers to the crypto asset market.
Local media reports say Prime Minister Narendra Modi's government is now letting interested ministry and agency officials look through draft bill that will define the country's basic policy toward crypto assets. One option for the legislation is said to be a complete ban on cryptocurrencies.
However, India's powerful technology industry is opposed to a wholesale ban. The country's biggest IT trade group, the National Association of Software and Service Companies, immediately after the Supreme Court ruling in March, released a statement welcoming the decision. "We believe that banning tech is not the solution. A risk-based framework must be developed to regulate and monitor cryptocurrencies and tokens," the statement said.
The country's biggest IT company, Tata Consultancy Services, unveiled a cryptocurrency trading platform for enterprises in July, while its rival Infosys in May began supporting Bangalore financial transactions platform developer Matic Network's blockchain-based technology.
If all types of crypto assets are prohibited in India, it will hinder the development of most blockchain-related technologies and businesses because crypto tokens, often called "altcoins," play an essential role in paying compensation to developers. As India aspires to be among the world's IT leaders, policymakers will need to consider how their decisions affect the industry.
No matter how it is shaped, the draft bill will almost certainly ignite a massive debate involving policymakers, crypto entrepreneurs, technologists, the tech industry and academics when it becomes public in the coming weeks. The outcome of that debate will determine whether India plays a significant part in the new technology of blockchain and crypto assets, which may create a new industry and thousands of jobs.