Cryptocurrencies have not had a pleasant start to 2018. Multiple government regulations, large-scale hacks, and scams have caused the crypto market to suffer a massive price crash after its meteoric rise last year. This volatility of digital currencies has sparked concern amongst central bankers worldwide.
Last year, Real-life ‘Wolf of Wall Street’ Jordan Belfort openly declared cryptocurrencies a “pump-and-dump scheme”. Even Christine Lagarde, chief of the International Monetary Fund (IMF) has predicted that government regulation will play a huge role in determining the future of cryptocurrencies and that it is “inevitable”.
And boy was she right.
From January to February 2018, Bitcoin collapsed from its peak of almost $20,000 all the way down to $6,139 – a 69% deficit. One of the reasons for this fall would be countries that have begun to introduce cryptocurrency regulations – some of the most outspoken ones being China, South Korea, and India.
Are We Seeing a Widespread Crypto Ban in India?
Cryptocurrencies have always found themselves in an awkward situation in India as although they are not technically banned, they are not considered as legal tender by financial institutions either.
This was highlighted by the Ministry of Finance as well as Arun Jaitley’s budget speech on February 1, where he revealed his ambiguous plan to regulate such financial instruments.
“The government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities,” said Jaitley.
However, Jaitley rhetoric was completely different last August, when he told the Indian Parliament that the government had “no authority to regulate cryptocurrencies”.
Cryptocurrency trading is becoming more and more popular in India, which boasts a 1.3 billion-people population. According to a prediction by Bitcoin-trading platform Unocoin, the number of new users they were getting is increasing at an exponential rate.
In an interview with a local news publication, Unocoin founder, Sathvik Vishwanth revealed the mind-boggling statistics.
“Early last year we were gaining about 10,000 new users each month. In December it was about 7,000 to 8,000 each day.”
Although cryptocurrencies remain to be legal in India, this doesn’t mean that law enforcement is making it easy for investors to trade Bitcoin and other cryptocurrencies.
Last Saturday, Ajay Tyagi, chairman of the Securities and Exchange Board of India announced that regulations on cryptocurrencies were being finalized, as well as the individual roles of regulators (source: New Indian Express newspaper).