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Cryptocurrencies have caught attention as an asset class in the last few years and have gone mainstream on the back of their sharp rally despite famed for their volatility and uncertainties around regulations in many countries including India. The digital token went further into the mainstream in 2021 as institutions and retail investors got involved with the crypto market. 

“Last year was an exceptional year for the crypto industry. Right from institutions getting involved with cryptos and raising millions of dollars to invest in the space to the booming NFT space. Ethereum outperformed Bitcoin this last year, along with the traditional markets," said Nischal Shetty, Founder, WazirX.

India became the second-highest nation in terms of crypto adoption, and given the current purview, experts believe that 2022 might arguably see India leading the world pack in deriving utilities from the decentralized disruption, provided the government takes a progressive regulatory stance. 

“The creator economy will witness incredible innovation in web3 iteration that might explode as the ‘new renaissance of entrepreneurship’ in 2022 itself’. We will also get to know more about popular Defi -projects and by March 2022, Defi contracts are predicted to secure a combined value of $41 billion. The Defi and DAO community have enjoyed substantial gains from yield farming, quite popular on Defi platforms," Shetty added.

Crypto adoption is likely to be witnessed from regional markets in India and with the current trend, more Indians are expected to join the crypto revolution across all demographics.

“We will see new trends in 2022 for crypto globally and in India as we deliberate on the regulatory framework and wait for the government authorities to clarify the ambiguity we face with regards to taxation and compliance related instructions might be prioritized this year," said Nischal Shetty, Founder, WazirX.

The crypto markets had a big year in 2021 and many experts see the likelihood for greater acceptance by mainstream investors and companies in the new year.

Once an asset gets regulated, it attracts a wider audience of investors. This comes with wider investor education and acceptance that reduces the uncertainty around the asset class. Cryptos could see this turnaround in 2022 should regulations swing in their favour, as per Asheesh Chanda, Founder & CEO, Krystal.Ai, with investor interest is bound to increase with more clarity on regulation and a resultant increase in investor education, which will allay investors' fears and anxieties around the security of investing in crypto.

On how should investors approach crypto investments this year, Chanda advised that risk management, not FOMO, should be the principle driving the investment decisions on crypto. 

“The two key pieces of advice here would be to not treat cryptocurrencies as an alternative to gold as while crypto has a few qualities of gold, it is limited in quantity and its value is not impacted by interest rate decisions. Further, one should allocate no more than 3-5%, given crypto's volatile nature, investors' allocation should be aligned to their risk appetite," he suggested.

The Indian government has worked on preparing a bill to regulate cryptocurrencies, which was expected to be presented to the Parliament in the Winter Session in November. Since it was not mentioned during the period, experts believe the government might mention it in the February budget.

2021 was a big year for crypto across the world. El Salvador became the first country to make Bitcoin legal tender this year whereas the first exchange-traded fund tied to Bitcoin futures also began to trade. 

“India cannot shut itself out from the cryptocurrency ecosystem. It's here to stay and is set to change the concept of money, globally. It's important for the government to allow, enable, and encourage innovation in the space," Chanda added. 

Globally regulators stepped in indicating regulatory intervention with respect to cryptocurrencies in 2021, with China completely banning all crypto-related activities and U.S. authorities cracking down on certain aspects of the market and India proposing a Bill to regulate Private cryptocurrencies.

"India's approach to crypto regulations has undergone a significant rethink over the past few years, and this year we can expect more nuance and clarity. The budget session this year would shed more light on the next steps in developing regulations, if not table and discuss the bill itself in the parliament. A crypto regulation will have to focus on identifying, monitoring and managing risks in the ecosystem," said Vaibhav Kakkar, Partner, Saraf & Partners.

Today, India already has close to 15 million crypto investors, and is now the world’s second-largest country when it comes to global crypto adoption, as per market research firm Chainalysis. 

“Even as crypto continues to grow as an asset class, Crypto’s true potential is much more than that. We are already seeing the early signs of this globally and in India as more and more industries, including banking, healthcare, and agriculture, adopt blockchain, the technology that enables cryptocurrencies," said Sharan Nair, Chief Business Officer, CoinSwitch Kuber.

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