Centre’s cryptocurrency 'regulation' may see shift to investors in equity markets

The Central government’s proposed Bill on cryptocurrency regulation will drive a significant number of investors to equities markets, analysts said. The Centre plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, during the winter session of Parliament, which begins on Monday. The bill apparently intends to outlaw all private cryptocurrencies.

"The total crypto investors is around 10 crore in India and currently there are only 8 crore demat account in the Indian system, and total investment is around Rs 6 lakh crore. If the Indian government puts a blanket ban, then this investment amount will surely shift into the equity market," CapitalVia Global Research, Lead Commodities and Currencies, Kshitij Purohit, said.

According to HDFC Securities's Head of Retail Research, Deepak Jasani, this Bill is unlikely to impact foreign institutional investors (FIIs) as they are lately investing in primary markets and selling in the secondary markets. "The bill may have little impact on FII flows as the FIIs are not expected to deal in these while investing in any markets going by current trends. Given the fact that most governments would like to discourage any cryptos other than those promoted by their central banks, FIIs would not like to antagonise the governments or their regulatory authorities," he said.

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