Over the past decade or so, the digital asset industry has proven to be very lucrative for market participants, especially those who can time the market and make well-informed investments and trades. For example, if one invested $10 in BTC in 2013, it would be worth almost $12,500 today. Therefore, cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, etc. They have turned many people into millionaires, in some cases almost overnight.
However, at the same time, cryptocurrencies are known to be highly volatile. The prices of these digital assets can fluctuate wildly over days or even hours. Not to mention that space is also full of scams, massive crashes, like last year’s FTX and Terra Luna crashes, and many other risks.
This high-risk, high-reward combination can make cryptocurrencies an attractive but dangerous playground, especially for novice investors.
With this in mind, the Indian authorities are planning to launch an awareness campaign on cryptocurrencies and online gaming that will educate citizens about these activities and the associated risks. The campaign will be led by the Investor Education and Protection Fund (IPEF), which is controlled by the Ministry of Corporate Affairs. The awareness campaign, first of its kind, is expected to cover the legal position of cryptocurrencies, the dangers of online gambling/betting and the risk of investing money in these platforms.
“The campaign will highlight that cryptocurrencies are not legal in India and that such assets also carry profound risks. Any investment where people are promised lucrative and assured returns has an elevated element of risk,” said a government official, quoted by an ET report.
Both the cryptocurrency and gaming sectors have long been under scrutiny by Indian lawmakers. For example, in July 2022, Finance Minister Nirmala Sitharaman expressed the Reserve Bank of India’s (RBI) concerns regarding cryptocurrencies, saying they should be banned as they have the potential to destabilize the country’s monetary and fiscal stability. More recently, the RBI shut down cryptocurrency exchanges across the country over their alleged involvement in money laundering of more than Rs. 1,000 crores.
And finally, in February 2022, the government imposed a hefty 30% tax on cryptocurrency profits and a 1% TDS on all crypto transactions.
Despite these hurdles, the declining valuation of cryptocurrencies and the collapse of several major cryptocurrency companies, retail investors continue to flock to cryptocurrencies in India. This highlights the need for an adequate regulatory framework that protects the interests of investors and safeguards them from potential losses. India’s cryptocurrency policy is one such framework. However, it is still under development and will be finalized after international collaboration and risk assessment.
Until then, the forthcoming awareness campaign around cryptocurrencies and online gaming may be of unparalleled importance. It can help control the risk and losses faced by cryptocurrency investors and online gamers, while proper regulations are devised and implemented. Therefore, several market experts welcomed the awareness campaign. “Cryptocurrency investing can be a complex and risky undertaking as the category is extremely volatile and operates around the clock. It is important that potential investors educate themselves thoroughly before making any decisions,” said the WazirX Vice President , Rajagopal Menon, a The Hindu.
However, the only fear is that the campaign could paint cryptocurrencies in a bad light, with the IPEF previously running awareness campaigns about ponzi schemes, chit funds and dubious crowdfunding schemes. Also, as mentioned above, the officials intend to dwell on the illegality of cryptocurrencies in India and discuss how they can be used for dubious activities such as money laundering. Therefore, experts believe that the tone and wording of your message will be of the utmost importance.
“If the government takes a heavy-handed approach and starts saying things like virtual currency is not legal in India, that won’t be entirely true. People may wrongly assume it’s illegal,” said Vipul Kharbanda, a non-resident fellow at the Center for Internet and Society (CIS). The Hindu. “One could engage in illegal transactions such as money laundering using cryptocurrencies. But illicit transactions can also be done using legal banking channels,” she explained.
Fortunately, the IPEF has a lot of experience with awareness campaigns. Established in 2016, this government body has overseen nearly 65,000 outreach programs that have reached over 30 lakh citizens. It is an investor-focused authority that, in addition to conducting awareness programs, also helps claimants with claim redress mechanisms and the repayment of shares, unclaimed dividends, and other deposits. Therefore, the cryptocurrency awareness program should be highly customer-centric and should help safeguard the interest of cryptocurrency investors.