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Crypto exchanges agree to curb misleading ads in meeting with PM: Report

Ads urging first-time investors to buy into an unregulated crypto market have propped up over the past few months.

The government is unhappy with crypto ads promising wild profits according to a memo summarising a meeting between Prime Minister Narendra Modi and industry stakeholders, The Economic Times has reported. Crypto stakeholders have agreed to put a stop to such ads, the report said.

In the last few months, crypto exchanges have been rushing to sign up new users, in what seemed like an attempt to make it harder for the government to altogether ban cryptocurrencies. Ads promising big returns, however, can mislead unsuspecting Indians into losing money by investing in a highly volatile crypto market.

How many Indians have invested in crypto?

As the government moves forward on regulating cryptocurrencies, they are rapidly growing in popularity among Indian investors:

  • 2 crore users: India has over 2 crore cryptocurrency investors, according to a conservative estimate by the founder of WazirX, India’s largest crypto exchange.

  • Rapid growth: WazirX recently reported an increase of 2648% in user sign-ups from tier-II and tier-III cities like Ahmedabad, Lucknow, Ranchi, Imphal, and Mohali among others.

How will the Indian government regulate cryptocurrencies?

A government source recently told the Economic Times that a blanket ban on cryptocurrencies in India is unlikely, adding that “a middle path that balances the concerns of all stakeholders is more likely.” Considering that Indians have made large investments in crypto assets, an outright ban is unfeasible, the source added.

India’s much-anticipated crypto bill is currently tabled before the Union Cabinet awaiting approval. Here’s a timeline of everything that’s happened till now around crypto regulation in India:

  • 2018: The Reserve Bank of India banned regulated entities including banks from providing services to crypto exchanges. It said that cryptocurrencies raise concerns of “consumer protection, market integrity, and money laundering, among others”.
  • 2019: A report by the Finance Ministry (drafted in 2017) advocated for a ban on the use of cryptocurrency in India. The report was drafted by an inter-ministerial committee chaired by the secretary of the Department of Economic Affairs Subhash Chandra Garg.
  • 2020: The RBI ban was then overturned by the Supreme Court of India which said that the move was “disproportionate”. It led to a surge in sign-ups across various crypto exchanges as they were able to access banking services.
  • 2021: Finance Minister Nirmala Sitharaman announced that the crypto bill was tabled before the Cabinet awaiting approval, LiveMint reported in August.
  • 2021: The RBI governor announced that the central bank is also working towards a “phased implementation strategy” for the introduction of central bank-backed digital currency (CBDC), giving regulators necessary powers of oversight and monitoring which cryptocurrencies lack.

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Reporter at MediaNama. Email: nishant@medianama.com

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