Since the end of 2021, cryptocurrencies are in a freefall. Even though the technology and idea behind cryptocurrencies have gained prominence the world over. But it has made governments all over the world scared because the governments have no control over them and their unregulated usage in the dark world and funding of terrorism. In this scenario, the governments are either banning cryptocurrencies altogether or placing regulations on them.

Cryptocurrencies are Self-governed and managed, Decentralized, Cost-effective modes of transaction, Secure and private, etc. But the reality of the situation now is that the countries that are not banning cryptocurrencies have started regulating them. Now, because of this investors' who were there to make a quick buck in the bull run of cryptocurrencies, started selling off their assets or stopped investing.

The Indian government, although is not against the technology that goes into the making of these digital assets and has even announced the creation of a "digital rupee" in the 2022 budget. And most importantly, instead of banning cryptocurrencies imposed a 30% tax on "all income from digital assets", in a bid to regulate it and not lose out on taxation on digital assets. Moreover, the government also said that the losses in crypto assets cannot be offset against the profits, which is done in the case of other financial assets. This bubble that Indian investors were living in, burst. Investors either sold off their crypto assets or stopped investing more.

Furthermore, the crypto trading applications in India, are also facing a lot of strain, their payment options have been restricted by RBI, which wants a complete ban on cryptocurrencies. Also, the offices of cryptocurrency trading platforms are being raided across India, for various reasons of non-compliance, tax evasion, etc. This has further eroded investor confidence, who have reverted to investing the traditional way.

Cryptocurrency scams are also rising, with the Squid coin being the most famous one. The Russia- Ukraine war, also added to the fall of cryptocurrencies because the war led to the rapid rise in inflation all over the world, thereby sending all markets including crypto in free fall as, investors' disposable incomes were reduced, and investors lost confidence in the market.

The future of cryptocurrency which looked promising a little while ago looks bleak. Still, with the regulations and taxation imminent by governments, this space should stabilize in the near future because the technology backing cryptocurrency is ever-evolving. For example, the NFT space which uses similar technology is a huge success and one of the reasons why cryptocurrencies are not being banned completely the world over.

And maybe in the not-so-far future cryptocurrencies could replace the unstable or highly inflated currencies in some countries and stabiles their economies. An example of this may be, Ecuador which is buying Bitcoin, as an investment in the future, where it hopes that it will help in the stabilization and growth of the economy.

Award Winning Article Is Written By: Mr.Kartikay Singhal

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