November 25, 2021, New Delhi: On November 23rd, the Government listed “The Cryptocurrency and Regulation of Official Digital Currency Bill 2021” to be presented in the Parliament’s Winter Session, seeking to prohibit all private cryptocurrencies trading in India while allowing certain exceptions to promote the underlying technology of cryptocurrencies and its uses. This bill came after the Prime Minister and the RBI raising concerns against cryptocurrency in the last few weeks. Industry experts claim that India’s digital currency market is estimated to have grown from USD 923 million in April 2020 to USD 6.6 Billion in April 2021. However, the RBI Governor Shaktikanta Das has raised doubt that the number of crypto users in India is exaggerated. He stated that roughly 70-80% of users only have small balances of INR 500-1000. He also warned against the use of cryptocurrency, highlighting the risk it poses to macro-economic and financial stability. The Securities and Exchange Board of India (SEBI) has also voiced its concern about the unregulated growth of cryptocurrencies in India, keeping vulnerable retailers and investors in mind. A meeting chaired by Prime Minister Narendra Modi early last week discussed the future of cryptocurrency amid concerns that it can be used as avenue for money laundering and financing terror. Further, a memo outlining the summary of the meeting showed the government’s displeasure over misleading advertisements by the crypto industry promising large profits. Following this, multiple crypto players have decided to halt new advertisements till regulations are set.

In addition to the RBI and the Government, activists and many citizens have also raised concerns on LocalCircles about crypto platforms targeting youngsters through misleading advertisements, promising high returns and highlighting how quickly upper and upper-middle classes have gotten into trading in cryptocurrencies in the last 18 months as well as a serious risk of middle- and lower-income classes getting lured into it.

Basis all these developments and strong citizen interest lately, LocalCircles has conducted an extensive study over the last 15 days to understand the level of trust Indians have in cryptocurrencies. It also sought to understand citizens’ pulse about how the Government of India should handle cryptocurrencies from a regulatory standpoint. Taking cognisance of the fact that there is no regulation to guide cryptocurrency in India, the study tried to find out if India should roll out its own digital currency which is managed by the RBI. The study received more than 56,000 responses from citizens residing in 342 districts of India. 66% of respondents were men while 34% of respondents were women. 42% of respondents were from tier 1, 33% from tier 2 and 25% respondents were from tier 3, 4 and rural districts.

71% Indians have low or zero trust in cryptocurrencies while 1% have high trust

As per reports about the meeting chaired by Prime Minister in mid-November, it was discussed how misleading advertisements are luring many young investors in an unregulated space. While the profits are highlighted on all platforms and even endorsed by celebrities, the losses barely make the news. Recently, investors lost millions of dollars in a scam related to Squid coin, created by an anonymous developer. The coin hit a market value of USD 30 million before the developers shut it down, causing the value of the coin to plummet to zero. Taking cognisance of such issues, the first question in the study asked citizens about the level of trust they currently have in cryptocurrencies. In response, only 1% said they have a “high” trust in cryptocurrency. 12% said they have an “average” trust, and 22% said it is “low”. 49% of Indians studied said they have “zero or do not trust at all”. 16% did not have an opinion. On an aggregate basis, 71% of Indians studied have low or zero trust in cryptocurrencies while 1% have high trust. This question in the study received 9,174 responses.

87% Indian families do not have anyone trading or investing in cryptocurrencies

The RBI Governor is of the view that the number of crypto investors in India is exaggerated as is the amount invested. The next question in the study attempted to gauge the penetration of cryptocurrency amongst the masses and asked “Are you or someone in your family trading or investing in Cryptocurrencies?” In response, 4% said “yes, multiple members” and 7% said “yes, just one individual” trade or invest in cryptocurrencies while 2% couldn’t say. On an aggregate basis, 87% of Indian families do not have anyone trading or investing in cryptocurrencies. This question in the study received 10,117 responses.

54% Indians do not want Government to legalise cryptocurrencies but tax them like a digital asset held abroad; 26% say they should be legalised and then taxed in India

With the latest development of Government listing of “The Cryptocurrency and Regulation of Official Digital Currency Bill 2021”, which is to be presented in the Parliament’s Winter Session, that seeks to prohibit all private cryptocurrencies in India, the study asked citizens about how India should handle cryptocurrencies from a regulatory standpoint. In response, 26% said “it should legalise these currencies and tax them in India”. A whopping 54%, however, said “it should not legalise but tax it like a digital asset held in a foreign country”, and 20% did not have an opinion. Overall, more than twice as many people want cryptocurrencies should not be legalised in India from a regulatory standpoint. This question in the study received 8,717 responses.

74% Indians believe cryptocurrency advertisements are not highlighting the risks involved in an effective manner

In the recent T-20 cricket world cup, 1 in 3 advertisements were of cryptocurrencies, with platforms and exchanges trying to attract viewers. The next question asked citizens about how effective they find the recent cryptocurrency advertisements in highlighting the risks involved. In response, 52% of citizens said they did it “completely ineffectively,” 22% said “quite ineffectively” and 6% said “somewhat effectively.” Only 5% of citizens believed that cryptocurrency advertisements are highlighting the risks involved effectively while 15% did not have an opinion. On an aggregate basis, 74% Indians believe cryptocurrency advertisements are not highlighting the risks involved in an effective manner. This question in the study received 9,942 responses.

Only 5% Indians in favour of continuing cryptocurrency platform advertisements as is; 76% want advertising to be on hold till regulations are ready

Cryptocurrencies are currently not regulated in India. The next question asked citizens about how cryptocurrency advertisements should work till the time the government or RBI comes up with regulation. In response, 15% of citizens were of the view that all advertisements should be approved by a Govt body (I&B ministry, Consumer Affairs Ministry, RBI, etc.) Only 5% of citizens were in favour of continuing cryptocurrency advertisements as is while majority of citizens, 76% said “all advertisements should be put on hold till the regulations are ready.” This question in the study received 9,277 responses.

51% Indians support India rolling out its own digital currency/cryptocurrency which is managed by the RBI; 26% against the same

The “Cryptocurrency and Regulation of Official Digital Currency Bill 2021” to be presented in the Parliament’s Winter Session seeks to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The final question in the study asked if India should roll out its own digital currency/cryptocurrency which is managed by the RBI. In response, the majority of 51% said “Yes”, 26% said “No”, and 23% did not have an opinion. This question in the study received 9,224 responses.

In summary, while many Indian citizens have invested in cryptocurrencies, the absence of a robust framework leaves investors open to high risks. This is confirmed by the study findings as 71% of the study respondents have low or zero trust in the same. The study finds that 87% of the respondent families do not have anyone trading or investing in cryptocurrencies. On regulation of cryptocurrency, 54% of the respondents do not want the Government to legalise cryptocurrencies but tax them like a digital asset held abroad; 26% say they should be legalised and then taxed in India. People also strongly believe that the current advertisements of the various cryptocurrencies, platforms and exchanges do not highlight the risks involved effectively with 74% respondents explicitly stating that they are not highlighting the risks involved in an effective manner. On regulation of advertisements, only 5% respondents were in favour of continuing cryptocurrency platform advertisements as is while 76% want advertising to be on hold till regulations are ready. The study also finds that 51% of the respondents support India rolling out its own digital currency which is managed by the RBI while 26% are against the same. This indicates that the Central Bank Digital Currency (CBDC) would be a more trustworthy investment.

With this extensive public feedback via LocalCircles and the Government listing the “Cryptocurrency and Regulation of Official Digital Currency Bill 2021” for the Parliament’s Winter Session, the stage is set for some debate and discussion not just between the parliamentarians but also amongst public at large and in media.

LocalCircles will share the findings of this study with key stakeholders in the Central Government, the Reserve Bank of India and all Member of Parliament so public feedback is kept at the forefront as the “Cryptocurrency and Regulation of Official Digital Currency Bill 2021” is taken up for discussion and approval in the parliament in a few weeks.

Survey Demographics

The study received more than 56,000 responses from citizens residing in 342 districts of India. 66% respondents were men while 34% respondents were women. 42% respondents were from tier 1, 33% from tier 2 and 25% respondents were from tier 3, 4 and rural districts. The study was conducted via LocalCircles platform and all participants were validated citizens who had to be registered with LocalCircles to participate in this study.