The Centre’s plan to introduce in Parliament a Bill to bar most private cryptocurrencies has triggered panic selling in the country’s digital currency market with investors looking to exit positions despite the losses.
The dollar-linked stable coin tether slumped 25 per cent to nearly Rs 60 ($0.8061) on Wednesday, said Naimish Sanghvi, a cryptocurrency investor. A second crypto investor said the value of his portfolio fell to about Rs 22,000 from Rs 34,000 on Tuesday as a result of heavy selling. “I am contemplating selling because the future appears so uncertain,” said the investor.
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Several exchanges were facing deposit and withdrawal challenges due to the high volume of selling, said cryptocurrency traders. WazirX, one of India’s largest cryptocurrency exchanges, said that it was investigating reports that users were facing delays on its app and website. It later claimed the issue had been resolved.
India has 15 cryptocurrency exchange platforms, including CoinSwitch Kuber, Zebpay, WazirX, UnoCoin and CoinDCX.
The industry, meanwhile, has urged the government to take a nuanced approach towards regulating crypto assets and asked investors to remain calm and not arrive at a rushed conclusion.
According to legislative agenda released on Tuesday for the winter session of Parliament commencing on November 29, the government will allow only certain cryptocurrencies to promote the underlying technology and its uses. The Bill, if passed, will effectively ban citizens in India from transacting in most cryptocurrencies.
Though there is no official data available on cyrptocurrency holdings and the user base, industry estimates suggest there are 1.5 crore to 2 crore investors in India. Private firm BrokerChooser had recently put the user base count at over 10 crore. The crypto investments in the country are said to have increased from Rs 6,876 crore in April last year to a whopping over Rs 40,000 crore in May this year.
A few exchanges have welcomed the move to regulate cryptocurrency, claiming that it would pave the way for transparency and accountability in the industry. They also demanded that the government should protect the interests of the large number of crypto investors in the country.
“The proposed Bill allows certain exceptions and its usage to promote the underlying technology of cryptocurrency. We will have to wait and watch,” said Sathvik Vishwanath, co-founder and CEO, Unocoin.
Some others feel that it was impossible to ban cryptocurrency. “While it’s clear that there will be some restrictions, the latest draft of the Bill has not been made public yet. There have been explicit references to “exceptions” in the Bill. Even if there is a total ban in India, the firms will immediately offshore their operations. Only on-shore crypto companies will be affected. Like China, India too won’t be able to shut down crypto,” said Hayden Hughes, Alpha Impact CEO.