It has been a rough week for cryptocurrencies, especially in one of the densely-populated countries in the world, India. Over the last few days, several news sources reported that India has decided to follow in China’s footsteps and issue a widespread crackdown order on cryptocurrencies.
“The Reserve Bank of India (RBI) has initiated a crackdown on cryptocurrencies such as bitcoin, even as it considers a proposal for issuing its own digital currency.” Quartz reported, dubbing this the “end of the road in India”.
As a result, the price of Bitcoin plummeted soon after the news was released. According to Coinome, one of India’s largest cryptocurrency exchanges, the price of Bitcoin in India dropped to more than $1,000 below the global average. According to CoinMarketCap, the price of Bitcoin dropped below $6,600 for the second time this week.
Price Rebounds as RBI Clarifies Its Stance
In another statement that was released today, it was revealed that the Quartz report was not entirely true – although India is indeed restricting the use of cryptocurrencies in the booming South Asian nation, they are not planning on issuing a nationwide, blanket ban on the promising new technology.
According to the RBI, they are cutting off all relations with digital asset companies. Over the next few months, other banks are expected to follow in the footsteps of RBI.
“Currently, all banks fall under RBI’s regulations, which means businesses that deal in cryptocurrencies can no longer rely on Indian banks to officiate or complete transactions.” The Merkle explains. “It’s an unfortunate move, but not the solid blockade so many sources originally claimed.”
This change in rhetoric saw an evident shift in Bitcoin’s price. Rebounding by over $300, or about 5% of its current price, Bitcoin once again made a move towards the $7,000 range, hoping to stabilize for good this time.
In retrospect, the FUD about India banning cryptocurrencies was rather uncorroborated. Since the RBI is merely a governing bank body, and not a legislative body, it would be impossible for them to issue a blanket ban on crypto even if they wanted to. Only three governing entities in India has the power to issue such an order – the state government, the central government, or India’s judicial branch.
Therefore, RBI’s ‘ban’ will only affect the banks in India. Businesses and individual investors in India are still allowed to trade and transact in cryptocurrencies, but they would have to find alternative platforms to cash out on their cryptocurrency earnings or to retrieve funds for future purchases.