India must formulate a clear policy on cryptocurrencies. There are daily trades worth Rs.35-40 crore which are rupee denominated. Its tax treatment is to be decided. There is a lurking threat of these currencies being banned by legislation.

Bitcoin has appreciated in 2020 by 300 per cent, and ethereum by 650 per cent. There is cryptocurrency index called CC130 Index which has escalated by 200 per cent.

Though cryptocurrencies have become expensive, they can be traded in small units. Bitcoins are fragmented into a hundred million Satoshis, named after its creator. Indian trade can happen at minimum value of about Rs.150.

Governments and financial institutions including investment banks have started treating cryptos as mainstream assets. In the US, there is a draft of proposed regulation. Several other countries and such as Japan, Estonia, Finland, Australia and South Korea have legislation governing cryptos. China proposes to launch its own cryptocurrency. The S&P proposes a cryptocurrency index. It is likely that hedge funds will have higher crypto exposure. There are crypto-investment services. Cryptos are economical in cross-currency trades. Cryptos will have greater share in global remittance market.

It is necessary to take all these factors into account while framing policy on cryptos.