Amid the news of cryptocurrency being regulated by the government soon, crypto investors were in a panic mode since a day back. The prices of Bitcoin, Solana and other cryptocurrencies fell a day ago, but rose slightly on Thursday, November 25, as markets began to stabilise after the initial ripple effect. The government, two days ago, listed a Bill to be tabled during the winter session of the Parliament. The Bill, ‘Cryptocurrency and Regulation of Official Digital Currency’ Bill, has sought to put a ban on the private digital tokens barring a few and introduce the Central Bank Digital Currency of the Reserve Bank of India instead.
Bitcoin was trading at Rs 43,69,008 in the Indian market, crypto trading website WazirX showed. This was slightly up from the 34,00,000 mark which the world’s largest cryptocurrency had registered on Wednesday, November 24. Cryptocurrency prices in the Indian market declined up to 20 per cent on Wednesday as investors in a panic mode began selling their assets.
“On Tuesday night, we saw huge selling in the rupee (INR-crypto) market on WazirX. We saw a 15-20 per cent crash in prices once investors engaged in panic selling. However, the market is showing recovery and is at a 3-4 per cent discount currently. A similar knee-jerk reaction was seen in January, when the contents of the bill were disclosed," WazirX CEO Nischal Shetty was quoted as saying by Times of India.
A bill to ban all private cryptocurrencies in India, with a few expectations to promote blockchain technology will be introduced in the upcoming winter session of the Parliament, the government said. “The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the bulletin listing the legislative business posted on Lok Sabha’s website said.
The Reserve Bank is also planning to launch its own digital currency. “To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India,” it added. The Lok Sabha bulletin did not provide any other details about the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
According to a report by CNBC TV18, former RBI governor Raghuram Rajan said that out of the 600 odd cryptocurrencies that exist in the Indian crypto market, only two or three will survive post the enactment of the upcoming Bill.
“If things have value only because they because they will be pricier down the line, that’s a bubble,” Rajan told CNBC-TV18, “…a lot of cryptos have value only because there is a greater fool out there willing to buy.”
The former RBI governor compared the current mania regarding cryptocurrency in India to that of the tulip mania in Netherlands in the 17th century.
But in the current scenario, experts are urging investors not to take a decision out of panic.
“The crypto industry is hopeful that the government will involve the industry stakeholders while drafting the bill. At CoinSwitch Kuber, we shall follow the directions provided by the government. As of now, I urge all crypto asset investors in the country to remain calm, do their own research before arriving at a rushed conclusion. Investors should wait for a government statement on this matter and not rely on secondary sources of information,” said Ashish Singhal, founder and CEO of CoinSwitch Kuber.
The government has repeatedly ensured that it will not totally ban cryptocurrency in India, and only private coins will be regulated. A regulation mechanism will be in place so that crypto is not misused. The government is concerned about the underground transactions happening against cryptocurrency — particularly its role in ‘hawala’ and terror funding,” sources told CNN-News18 on Wednesday.