In 2016, when Hiten Malviya (29) bought a bitcoin for the first time, the virtual currency was worth less than $1,000. After an initial investment of Rs 40,000, Malviya had become a ‘crypto millionaire’ within a year as the value of bitcoin hit $20,000 in 2017-end. In 2018, Malviya, however, lost nearly 80% of his net worth as bitcoin’s price crashed to $3,000. He could not even access his assets due to an RBI ban on facilitation of crypto trade by banks. “It was a difficult time not only financially but also socially. Crypto was perceived as illegal,” said Malviya.

Crypto is still in a legal grey zone but it has become a household phenomenon amid the pandemic as the prospect of multi-bagger returns attracted Indians to the highly volatile digital tokens. According to Reuters, up to 15 million Indians own crypto assets. Crypto’s rising popularity caught policymakers’ attention earlier this year. Last month, the government said it will introduce a bill seeking to ban ‘private cryptocurrencies’ while allowing for ‘exceptions to promote the underlying tech’ in Parliament’s ongoing
session.

The government’s cryptic announcement, however, had spooked Indian investors and led to heavy selling. Nishcal Shetty, CEO of crypto exchange, WazirX, said, “The Indian market was trading at 15-20% discount to the global one briefly. The description of the bill being the same as in January had induced fear
among investors,” he said.

However, Parliament’s month-long winter session is set to end on Thursday and there are no signs of the bill still. To add to investors’ worries, the RBI last week told its board that a complete crypto ban was needed as partial restrictions won’t work.

The domestic crypto industry, which includes unicorn startups, has been in talks with the government and FM Nirmala Sitharaman’s statement in Parliament in Novemberend — that the government has no plans to recognise bitcoin as a ‘currency’ — is in line with industry demands. “Crypto should be classified as an
asset class. It is similarly regulated in many other countries, and most use cases of crypto are aninvestment and not payment,” said Ashish Singhal, co-chair of industry body BACC.

Crypto exchange BuyUcoin’s CEO Shivam Thakral also said that the “industry has been advocating against any recognition of crypto as a legal tender”. The government and the RBI have a problem accepting privately issued currencies as they are not backed by a guarantee or commodities. The bill will be closely watched as the government’s definition of ‘private’ crypto is not clear.