A month after India announced strict restrictions on cryptocurrency transactions, trading volumes have surged
As Bitcoin approaches $10k, market sentiment in the world’s second most populous country has shifted to the extent that it seems to have outweighed any concerns Indian investors might have about the impending ban. Reuters speculate that traders are now rushing to convert rupees into bitcoin while there is still time to buy from local exchanges.
India-based exchange Coindelta stated that average daily trading volumes have reached $75 million — almost as much as before the crackdown was announced. “There is a positive sentiment in the industry that the government will not ban trading in cryptocurrencies, and even if formal banking channels cannot be used, people can move to crypto-crypto trading platforms,” said Shivam Thakral, CEO of BuyUcoin, another Indian crypto exchange. “New investors are coming to our exchanges while existing ones are regaining interest after the drop because they’re getting good value and are making money as the prices of cryptocurrencies move higher,” he said.
A three month window was opened by the Reserve Bank of India in April, giving banks a limited time to settle their scores with businesses and retail investors that deal with cryptocurrency. The clampdown was justified with reference to the usual concerns put forward by governments across the world; money laundering, financial instability, and investor protection.
However, many have expressed optimism that although the bank have issued a blanket ban, the government will eventually consider more balanced measures. Quartz report that the Indian Government has ordered its finance ministry to prepare a draft law for bitcoin and other cryptocurrencies, that is expected to be submitted by March 2019.
In September last year India was one of the fastest growing markets for cryptocurrencies, and the government were seen to be open to the new technology. Nicholas Cary, co-founder of Blockchain.info, spoke optimistically of the government’s attitude in an interview with The Hindu: “The digital strategy the Indian government has pursued is in alignment with some of the things we see happening [across the world] as well, which is that, once you can use technology to do things easier and more affordably, then in the long run people will end up eventually going in that direction,”
“India has also witnessed a surge in use of digital wallets in daily transactions,” added Mr. Cary, noting that digital solutions were commonly employed by citizens for international remittance.
Crypto enthusiasts refusing to back down
Little wonder then, that Indian crypto enthusiasts have refused to back down. Moments after the ban was announced, a number of petitions were posted, including one by crypto startup Kali Digital Ecosystems filed to the High Court of Delhi.
The petition claims that the RBI’s unilateral move to crack down on crypto is “arbitrary and unconstitutional”, and does not give “ strong facts as to why RBI is against the business of cryptocurrencies.”
Meanwhile, an online petition was circulated urging the RBI to withdraw its decision. This was launched by Bitbns, another cryptocurrency exchange, and has received over 40,000 signatures. The petition rallies against the Indian bank choosing to restrict public access to cryptocurrencies, which could set India back for future generations. It states, “This is clearly stifling innovation around blockchain. If a government does not facilitate adoption of new technology the country stands to be left behind. “
Traders will trade regardless
Even with the spectre of regulation looming, Indian investors have continued to trade unabated, and are likely to do so even after the ban comes into effect. In an age of VPNs and darknets, avid crypto enthusiasts will continue to find ways to purchase cryptocurrency, but without the potentially taxable benefits to the government.
When the RBI’s prohibition begins, those looking to trade cryptocurrencies could use digital banking services like Revolut, over-the-counter services like localbitcoins.com, or simply venture over to some of the shadier internet markets. Rahul Nambiampurath, a crypto enthusiast from South India, aptly summarised the situation:
“The 70% who are in for the FUD, are shaken by the new restrictions and updates. The remaining are little bothered as they know that they can go with alternate services like localbitcoins.”
A month after India announced strict restrictions on cryptocurrency transactions, trading volumes have surged.