23 November 2021 there was a 15% crash in crypto currency market (Bitcoin down over 17%, ETH by 15%, and Tether down by almost 18%) due to the news of introduction of a Bill in parliament to prohibit all private cryptocurrencies in India
This has
raised various points to ponder for investors and traders:
Crypto currency will be banned?
Considering
the discussion and awaited Cryptocurrency and Regulation of Official Digital
Currency Bill 2021 the ban of crypto currencies is not probable event. Furthermore,
government wishes to tax and regulate crypto, hence there is very less
probability of ban of crypto.
What regulations could be expected?
Various sources
suggest the following:
- Crypto may not be recognized as a legal currency in India but could be considered as Cryptoasset.
- Cryptoassets would continue to be traded on existing crypto exchange platforms which would be regulated by Securities and Exchange Board of India (SEBI).
- A cut-off date will be prescribed to declare the holdings and would be regulated by the market regulator.
- The central bank will regulate issues related to cryptocurrency.
- The virtual currency[1] by the Reserve Bank of India (RBI) has not been clubbed with the new crypto bill.
- Violation of provisions will be penalized with criminal imprisonment of 1.5 years with penalties ranging from ₹ 5 crore to ₹ 20 crore.
- The provisions of the Prevention of Money Laundering Act (PMLA) will apply with suitable amendments on crypto.
Should we liquidate the invested funds?
In light of
awaited bill and discussions around crypto currency. There is no probability of
ban on crypto hence the funds are still secure. Further, government would take
up measures to safeguard the large scale of investors. However, volatility of
market may not be something escaped from, hence, only those funds which are
beyond the necessity should be kept invested and await the government’s dicta.
Take investment decision basis the risk appetite of individual.
Avoid any
hasty decisions. Do your own research, and focus on market movements rather
than misinformation while making investment decisions. Ensure the applications
through which the investment is made is secure.
Why there is huge difference between crypto coin prices in Indian exchanges and foreign exchanges?
There is no
standard or global BTC price across countries or even exchanges within the same
country Prices of cryptocurrencies, like Bitcoin, vary across due to demand and
supply. Due to the ongoing events around cryptocurrency in India, the demand
has momentarily dropped. This in turn caused a price drop, while global
exchanges remain unaffected. Hence, the price difference between Indian and
Foreign exchanges.
Is the Government justified in placing regulations on cryptocurrencies?
I would like to hear your opinions and thoughts on this step of government on focusing on regulating even the crypto market!
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