The cryptocurrency market has been taking a series of setbacks, but specially in India.
Clampdowns by certain banks and lack of implementation of policies by the government have made sure that cryptocurrency doesn’t have much place in the Indian finance market, though industry insiders say the phase may be temporary.
“The market is very, very dull,” said Sathvik Vishwanath, co-founder and CEO of Unocoin, a bitcoin exchange.
Cryptocurrency trade in India has dropped by almost 90%, from a peak of 15,000 units per day towards the end of 2017, to a mere 1,500 units as of March 2018, industry experts report.
Leave the trade, but the cryptocurrency prices have also fell down hard. For instance, Bitcoin, the most popular virtual currency, went from $1,000 a piece at the start of 2017 to over $20,000 by the year end. Now it has whipsawed back to below $8,000.
With this, the investor interest has also declined sharply. A few months ago, the top e-currency exchanges of India were adding between 200,000 and 300,000 investors a month; now that has reduced to around 50,000 at the most.
Investors say this is the lack of official regulations and policies by the government which are misleading the cryptocurrency market.
Nischal Shetty, founder and CEO of WazirX, another Indian cryptocurrency exchange, told Quartz.
“Apart from Japan, no other country, including India, has clarified its stand on cryptocurrencies. There is fear among people over uncertainty of regulation and that is the reason they are holding back,”
While bitcoin and its peers have not been declared legal or illegal in India, but the government and the banking regulator have constantly cautioned investors to stay away from them.
Some top banks like the State Bank of India, HDFC Bank, and Citibank have either forbidden or issued strong advisories against using their debit and credit cards for cryptocurrency-related transactions. This has left investors and exchange platforms in a state of fret.
“We don’t know what is the underlying information that the banks have that they have turned so negative. The regulators had only issued cautionary statements but banks have gone several steps ahead and have just decided that it isn’t good for people,”
A committee chaired by Subhash Garg, secretary of economic affairs in the finance ministry, is working on draft regulations for cryptocurrencies. These are likely to be in place by the end of the next financial year, which means the state of cryptocurrency use in India would be uncertain without any outcome till the next year.
However, the exchanges are taking heart in the fact that such lacklustre phases have come and gone for the virtual currency ecosystem in India. Vishwanath said
“We have seen such flat phases a few times in the last four-five years (ever since bitcoin trading in India has picked up). And so hopefully the tide will turn soon,”
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