In 2018, the Reserve Bank of India barred local banks from dealing with crypto businesses such as Bitcoin exchanges. Consequently, Bitcoin dealers and investors in India lost access to fiat-enabled exchanges and have been using peer-to-peer transfers to convert cryptocurrencies, which can be unsafe and impractical.

However, the pressure from other market competitors could make the government of India rethink its strategy. The prime example of that being Bahrain, who is trying to lure disgruntled Indian crypto companies towards its crypto friendly commercial landscape, possibly spiriting away investment worth billions of dollars out of India.

On 3 March, The Economic Times reported about the government of Bahrain and its invitation to Indian cryptocurrency companies to relocate to a country which has been moving swiftly to establish itself as a fintech hub. This includes initiatives like the Bahrain Economic Development Board (EDB) offering crypto businesses a wider range of resources such as a practical regulatory framework as well as proper banking solutions to support growth and innovation.

Bahrain completed its regulatory draft specifically for cryptocurrencies two months ago and has now finally finished the legislation. Also, the Central Bank of Bahrain (CBB) has also created the right ecosystem to harbor crypto growth and innovation. CBB has ratified new regulations supporting open banking, simplified crypto asset trade regulation, drafted a regulation on robo advisory, and streamlined remittance collection to enhance the expansion of its financial service sector, which constitutes a large portion of the country’s GDP.

This aggressive move by Bahrain will undoubtedly make India revisit its crypto policy of imposing a blanket ban on all cryptocurrency transactions. This is a similar phenomenon that led to a previously crypto skeptic country, South Korea, loosening its crypto policies after investors were threatened by markets in Japan, Singapore, and Hong Kong.