In a landmark decision on March 4, the Supreme Court of India overturned the Reserve Bank of India’s (RBI) four-year banking ban on cryptocurrency transactions. The ruling has sparked a significant increase in crypto trading activity across the country, signaling renewed confidence among investors and exchanges alike.
The RBI had imposed the restriction in April 2018, prohibiting banks from providing services to individuals or businesses dealing with cryptocurrencies. While this didn’t outlaw digital assets outright, it severely hampered the ability of Indian crypto platforms to operate, forcing many to shut down or pivot to peer-to-peer and crypto-to-crypto trading models.
Now, with the legal roadblock removed, the market is experiencing a revival—both in user engagement and trading volume.
Renewed Momentum for Indian Crypto Exchanges
One of the most prominent beneficiaries of the court’s decision is CoinDCX, which brands itself as India’s largest cryptocurrency exchange. According to Sumit Gupta, co-founder and CEO, the platform has seen explosive growth since the verdict.
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“In just under 50 days post-ruling, we added 50,000 new users,” Gupta revealed. “User registrations have nearly increased tenfold, and the trading volume for the BTC/INR pair has surged by 78.36%.”
This rapid rebound highlights pent-up demand and long-standing interest in digital assets among Indian retail investors. With banking channels now accessible again, users can seamlessly deposit and withdraw Indian rupees, removing a major friction point that had plagued the ecosystem for years.
Key Drivers Behind Rising Crypto Adoption
Several factors are converging to fuel this resurgence in cryptocurrency trading.
First, there’s a return of previously sidelined traders. Ajeet Khurana, former CEO of Zebpay—one of India’s earliest crypto exchanges—points out that many experienced investors had stayed away during the banking ban but are now re-entering the market.
“There’s a wave of returning traders,” Khurana explained. “But this is largely existing capital coming back, not necessarily fresh investment. If we were seeing substantial new money entering, we’d likely observe a stronger upward trend in prices.”
Second, the ongoing global pandemic has played an unexpected role. With millions of Indians under lockdown due to COVID-19, more people have found time to explore alternative investment options online—including cryptocurrencies.
“The quarantine period has given individuals the bandwidth to learn about and engage in digital trading,” Khurana added. “People are spending more time at home with their computers, researching financial opportunities beyond traditional savings.”
Inflation Hedge Appeal Grows Amid Monetary Expansion
Another powerful driver is growing concern over inflation and currency devaluation. As central banks worldwide—including the U.S. Federal Reserve and even emerging market institutions—unleash massive liquidity programs, investors are increasingly viewing cryptocurrencies like Bitcoin as a hedge against fiat currency erosion.
Gupta emphasized this global trend: “With central banks printing money at unprecedented rates, the purchasing power of the rupee is quietly declining. Only a small fraction of Indians are aware of this yet—but those who are are reallocating part of their portfolios into crypto.”
Some advocates have begun comparing Bitcoin to gold, positioning it as a modern store of value. While still speculative, the narrative is gaining traction among tech-savvy investors.
However, Khurana cautions against drawing direct parallels just yet. “Bitcoin doesn’t currently offer the same safe-haven status as gold. Its price movements remain closely tied to risk-on market sentiment, similar to equities. For crypto to truly become a reliable hedge, we need deeper institutional participation and significantly higher market maturity.”
Regulatory Uncertainty Looms Despite Legal Victory
Despite the Supreme Court’s favorable ruling, the legal status of cryptocurrencies in India remains ambiguous.
While the court struck down the RBI’s banking ban, it did not declare digital assets legal tender. Moreover, a proposed government bill—the Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, first introduced in 2019—seeks to criminalize private ownership of cryptocurrencies while paving the way for a state-backed digital rupee.
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This legislative uncertainty continues to pose risks for investors and businesses operating in the space. Without clear regulations, long-term planning and institutional investment remain challenging.
Still, industry leaders remain optimistic. The reversal of the banking ban is seen as a critical first step toward formal recognition and regulation—not prohibition.
Frequently Asked Questions (FAQ)
Q: Is cryptocurrency legal in India?
A: As of now, owning or trading cryptocurrencies is not illegal. The Supreme Court invalidated the RBI’s banking restrictions in 2020, allowing financial institutions to serve crypto businesses. However, no comprehensive regulatory framework exists yet.
Q: Can I buy Bitcoin with Indian Rupees?
A: Yes. Following the court ruling, major exchanges like CoinDCX, WazirX, and others have resumed INR deposit and withdrawal services, enabling direct BTC/INR trading pairs.
Q: Are crypto gains taxed in India?
A: While specific crypto tax laws are still evolving, profits from digital asset trading may be subject to capital gains tax under existing income tax rules. Investors should consult a tax professional for compliance guidance.
Q: Could India ban cryptocurrencies in the future?
A: There have been draft proposals aiming to ban private cryptocurrencies, but none have become law. Given rising public interest and economic potential, experts believe regulation is more likely than an outright ban.
Q: How safe are Indian crypto exchanges?
A: Reputable platforms employ robust security measures like two-factor authentication and cold storage. However, users should practice due diligence—using strong passwords, enabling 2FA, and avoiding phishing scams.
Q: What's driving increased crypto interest in India?
A: Key factors include financial inclusion goals, inflation concerns, youth-driven tech adoption, and increased access to smartphones and internet services.
The Road Ahead for Digital Assets in India
India’s crypto ecosystem stands at a pivotal moment. The removal of the banking ban has reignited momentum, but sustainable growth will depend on clear regulation, investor education, and broader financial integration.
With over 1.3 billion people and one of the fastest-growing internet user bases globally, India represents a massive potential market for digital currencies. If policymakers choose a balanced regulatory path—encouraging innovation while managing risks—the country could emerge as a leader in responsible crypto adoption.
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For now, rising trading volumes and user numbers suggest strong grassroots demand. As awareness spreads and infrastructure improves, cryptocurrencies may soon move from the fringes to a mainstream investment option for millions of Indians.
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