Indian investors are flocking to cryptocurrencies like never before and the trend could be a dangerous one.

Indians had parked nearly $6.6 billion (Rs49,189 crore) in cryptocurrencies until May this year, as compared to around $923 million until April 2020. The country ranks 11 out of 154 nations (pdf) in terms of cryptocurrency adoption, as per blockchain data firm Chainalysis.

Many believe that this growth is still just the tip of the iceberg and many more Indians will likely flock to digital coins in the near future. “India has a population of 1.39 billion that is predominantly young which is seen as tech-savvy and more adaptable to crypto saving,” Harish BV, co-founder of Unocoin, which has a userbase of 1.3 million in India, had told Quartz in May.

While this growth has given Indian cryptocurrency exchanges a reason to celebrate—and attract funding from global investors—the boom is happening in the absence of any stringent guidelines from the central bank or the government. This is particularly problematic because of the Indian government’s past relationship with cryptocurrencies.

The popularity of cryptocurrencies in India

In April 2018, almost overnight, India’s central bank had restricted banks (pdf) from engaging in cryptocurrency-related dealings. The decision was turned down by the supreme court in March last year, which led to a manifold rise in demand for virtual currencies.

Most recently, on May 31, the Reserve Bank of India (RBI) issued a statement where it advised banks not to cite its