Over the last decade or so, the digital asset industry has proven to be highly lucrative for market participants, especially those who can time the market and make well-informed investments and trades. For instance, if one invested $10 in BTC in 2013, it would be worth nearly $12,500 today. As such, cryptocurrencies like Bitcoin, Ethereum, Dogecoin, etc have turned plenty of people into millionaires, almost overnight in some cases.
However, at the same time, cryptocurrencies are known to be highly volatile. The prices of these digital assets can fluctuate wildly in days or even hours. Not to mention, the space is also fraught with scams, massive collapses, such as the FTX and Terra Luna meltdowns from last year, and plenty of other risks.
This high-risk, high-reward combination can make cryptocurrencies an attractive yet dangerous playground, especially for novice investors.
Keeping this in mind, Indian authorities are planning to launch a crypto and online gaming awareness campaign that will educate citizens about these activities and their associated risks. The campaign will be conducted by the Investor Protection and Education Fund (IPEF), which is controlled by the Ministry of Corporate Affairs. The first-of-its-kind awareness campaign is expected to cover the legal standing of cryptocurrencies, the dangers of online gambling/betting and the risk of putting money into these platforms.
“The campaign will highlight that cryptocurrencies are not legal in India and there are also deep risks involved in such assets. Any investment where the people are being promised lucrative and assured returns, there is an element of high risk”, a government official said, as quoted by an ET report.
Both the crypto and gaming sectors have long faced scrutiny from Indian lawmakers. For instance, in July 2022, Finance Minister Nirmala Sitharaman conveyed the Reserve Bank of India's (RBI) concerns regarding cryptocurrencies, saying that they should be prohibited as they have the potential to destabilise the country’s monetary and fiscal stability. More recently, the RBI clamped down on crypto exchanges across the country for their alleged involvement in money laundering of more than Rs. 1,000 crore.
And finally, back in February 2022, the government imposed a hefty 30 percent tax on crypto profits and 1 percent TDS on all crypto transactions.
Despite these hindrances, the dwindling valuation of crypto assets and the collapse of several large crypto firms, retail investors continue to flock to cryptocurrencies in India. This highlights the need for a proper regulatory framework that will protect investor interests and safeguard them from potential losses. India’s long-pending crypto policy is one such framework. However, it is still being developed and will be finalised after international collaboration and risk evaluation.
Until then, the upcoming crypto and online gaming awareness campaign can be of unparalleled importance. It can help control the risk and losses faced by crypto investors and online gamers, while proper regulations are drawn out and implemented. As such, several market experts welcomed the awareness campaign. “Cryptocurrency investing can be a complex and risky endeavour as the category is extremely volatile and works round the clock. It is important for potential investors to thoroughly educate themselves before making any decision,” said vice-president of WazirX, Rajagopal Menon, to The Hindu.
However, the only fear is that the campaign might paint cryptocurrencies in a poor light, with IPEF previously conducting awareness campaigns on ponzi schemes, chit funds and dubious crowdfunding projects. Moreover, as mentioned earlier, officials plan to dwell on the illegality of crypto in India and discuss how it can be used for dubious activities such as money laundering. Therefore, experts believe that the tone and wording of the messaging will be of utmost importance.
“If the government takes a heavy-handed approach and starts saying things like virtual currency is not legal in India, that will not be entirely true. People may presume incorrectly that it is illegal,“ Vipul Kharbanda, a non-resident fellow at the Centre for Internet and Society (CIS), said to The Hindu. “One may be indulging in unlawful transactions like money laundering using crypto assets. But unlawful transactions can also be executed using legal banking channels as well,” he explained.
Fortunately, the IPEF has plenty of experience with awareness campaigns. Established in 2016, this government body has overseen nearly 65,000 awareness programmes that have reached over 30 lakh citizens. It is an investor-centric authority that, besides conducting awareness programs, also helps claimants with grievance redressal mechanisms and the refund of shares, unclaimed dividends and other deposits. As such, the crypto awareness program is expected to be highly customer centric and should help safeguard the interest of crypto investors.
