Indian Finance Minister Arun Jaitley assured there would be a crackdown on the cryptocurrency market, targeting its use for tax evasion, money laundering, and other illegal purposes. Jaitley, while presenting the Union budget, emphasized again that bitcoin is not adjudged as a legal tender.
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Jaitley’s Announcement Reflects in Indian Crypto Exchange Prices
The new announcement immediately sent crypto traders into panic mode. However it may have been an overreaction — Jaitley pointed that it would ban cryptocurrency trading related to illicit activities only, not all activity.
Indian crypto exchanges usually trade bitcoin at a higher price than the international value of the digital asset. The current financial control system in India is such that it makes it difficult for Indian to purchase BTC from abroad and for international arbitrage traders to take advantage of the high price of bitcoin on the Indian exchanges.
However, at press time the bitcoin price on Indian exchanges is actually lower than the international value.
The announcement from the Indian Finance Minister has reflected on all local crypto exchanges.
Zebpay, the country’s leading bitcoin exchange, saw continuous fluctuations with the bitcoin buy price dropping to a low of Rs. 250,000 ($3,922 USD) and sell price to Rs. 233,000 ($3,655).
During that time the international value of BTC fluctuated between $9,700 to $10,000. However, the bitcoin price on Zebpay steadied between Rs. 550,000 ($8,629) to Rs. 600,000 ($9,414).
Zebpay experienced a major dump due to the fear of Indian government banning all cryptocurrencies and/or strictly regulating it. The Indian Finance Minister, whether intentionally or innocently, spread FUD (fear, uncertainty, and doubt) among crypto enthusiasts.
No Clear Stance from the Indian Government
Over the past six months, crypto trading has increased in India due to the snowballing effect in crypto prices. A recent survey suggested that transactions worth over $3.5 billion have been performed using cryptocurrencies over past 17 months in the country.
Ajeet Khurana, head of the Blockchain and Cryptocurrency Committee said:
“Given the growth in the number of participants in bitcoin and other cryptocurrencies and trading volumes, it is the time that the government makes its stand known. Even if a detailed policy framework is not possible at this stage, an indication of the government’s mind will help in the robust growth of one of the fastest-growing sectors of fintech.”
At the same time, the government is still studying virtual currencies and regulation encircling the crypto space around the world. The government formed a special committee, but is still unsure on the road ahead for bitcoin. The lack of regulations and a clear stance from the government has infused a state of chaos in the crypto space.
Will the Indian government put an outright ban on cryptocurrencies? Let us know your views in the comments section.
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