Yes! You read it right. India is not going to ban but regulate the volatile digital currencies. The updated draft of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will regulate crypto and not completely ban it.
The Indian government took the move because the crypto stakeholders wanted a regulation on corrupt practices in the crypto market. Also, they wanted a check if there were any scams since there have been several crypto scams lately, Squid game coin being the largest.
Crypto Market Response
India is a large crypto market. According to data released by the Blockchain and Crypto Assets Council, India holds about $80.6 billion in crypto assets. Therefore, the market fell significantly when the country announced on Tuesday that it might ban most digital currencies barring a few. Yesterday, in response to the announcement, Bitcoin was down by approximately 18.53, Ethereum saw a decline of 15.58%. Further, Tether fell by 18.29%.
However, the news of regulation instead of a complete ban has stabilized the market a bit. Bitcoin is still down but in a recovery phase. It is down by 0.15% currently. Further, Ethereum is up by 2.86%. However, the meme frenzy digital currencies- Shiba Inu and Dogecoin are still seeing a decline.
How was the ban avoided?
The Standing Committee on Finance and the representatives of crypto exchanges, Blockchain and Crypto Assets Council (BACC), had a discussion last week. They then concluded that digital currencies should not be completely banned. However, the bill should regulate the crypto market.
The aforementioned bill was produced in order to curb corrupt practices and scams that investors might be lured into. There have been numerous fake advertisements on social media. These ads demand investors to pay a certain amount- usually more than 10,000 INR (approx. 67 USD) and promise more than 100% returns. This has been a serious concern since not a lot of people know about the functioning of the crypto market. Therefore, the Indian government had to step in and regulate it.
India and Crypto: History
India has always had a dynamic relationship with the crypto market. Earlier, in 2018, it banned cryptocurrencies citing “serious concerns” for the move, which might have affected its citizens who invest in those. Then it lifted the ban on private digital currencies in 2020. Further, now they were contemplating a ban. However, the plan changed in due course of time.
The Road Ahead
Also, India wants to pave the way for its very own ‘inhouse’ digital currency. This move would be beneficial for its citizens. However, it is not certain that the market would respond positively to it.
Let’s see how the volatile crypto market responds to such developments in the future.