India has emerged as an important country for Bitcoin’s growth and future. The demonetisation drive sprung upon the nation by the Modi government late last year helped boost bitcoin usage like never before. With ATMs and banks running dry, people of the second largest population on the planet turned to digital currencies and mobile wallets to quench their cash thirst.

The virtual currency, which came into existence nine years ago in the year 2008, is still in its nascent stage in the South Asian country. Though not yet recognised by the country’s government, but the bitcoin industry in India is still seeing an increasing growth in number of bitcoin players as well as users. According to reports, there are over a million users of the cryptocurrency in the country make it the 4th highest in the entire world.

According to experts, the increasing acceptance of the digital currency is fuelled by the surge in its value. So far, 2017 has proved to be a good year for bitcoin with its value touching an all-time high. In January, the cryptocurrency surged pass the $1,000 mark for the very first time in a period of three years. In May, it bet this record and crossed the $1500 mark, and became more valuable than gold. In June, the combined market capitalisation of cryptocurrencies all around the world crossed the $100 billion milestone.

Seeing Bitcoins increasing value and usage in the country, the government recently launched on a mission to regulate the cryptocurrency (Read Here). But, according to latest updates, the talks have hit a standstill for now due to a difference of opinion between the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) regarding the nature of categorisation of the cryptocurrency. The matter was uncovered during a finance ministry organised stakeholder meeting to discuss the regulatory framework of the virtual currency in the country.

While RBI considers Bitcoins as a security matter and wants SEBI to take charge to regulate it as commodity derivative in the same way as Gold and Silver, SEBI has conflicting views to offer and doesn't agree with RBI's interpretation of Bitcoins. According to SEBI, without the presence of any proper legal terminology and other legal gray areas surrounding the cryptocurrency, they
cannot consider it as a commodity.

The government needs to ensure that the regulation mechanism is as comprehensive as possible, is technologically savvy, and foolproof because even a slight delay in keeping track of the latest developments could end up making the regulations useless.

While the government is still contemplating on the whole Bitcoin regulation debate, the Bitcoin industry in the country has made up its mind for a self-regulatory body. Talking to Bitcoinist, Zebpay co-founder Sandeep Goenka said that the creation of a self-regulatory body is not just the preference of the Indian Bitcoin Industry, but is also the best solution possible to tackle the problem of regulating virtual currencies in the Indian subcontinent. According to him, since the industry experiences constant evolution and changes, it might become a little difficult for the government to keep a track of all these adjustments and developments. Hence, a self-regulatory organization makes much more sense.

Claiming to be India’s largest Bitcoin exchange, Zebpay began its official journey in 2015 when it launched itself as a Bitcoin wallet. Though the founders initially expected people’s interest in India to be low, but they were pleasantly surprised at what they saw. In May this year, Zebpay announced that its app has reached the milestone of five lakh downloads, and is now adding more than 2500 users every day. As of today, the app has more than seven lakh downloads.

The government's main aim behind regulating Bitcoins is to keep a close watch on their usage for illegal activities such as money laundering, drug trafficking and terror funding etc.

While government regulation for Bitcoin might help in curtailing all these aforementioned illegal activities, it could also interfere in the industry's technological advancement work something which the industry doesn't want. We think, for now, the government should give a self-regulatory organisation a try, at least for a couple of years and see how that pans out.

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