Quartz India has released a report that intends to reassure panicked Indian crypto holders. Following the Indian government’s proposal to ban private cryptocurrencies, prices of major coins have fallen significantly. However, the price fall may be premature and it is too early for crypto players to be worrying.
It may be too early for cryptocurrency players in India to be panicking over a possible ban on virtual tokens. As of yesterday, prices of major cryptocurrencies have fallen significantly—bitcoin by 17%, ethereum 15%, and tether by almost 18%.
The price fall is a response to the Lok Sabha bulletin (pdf), which was released on Nov. 23. The bulletin said that the Cryptocurrency and Regulation of Official Digital Currency Bill will be presented in the winter session of parliament. This starts on Nov. 29. The new bill proposes banning private cryptocurrencies in India, but “allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
While major details of the bill remain unknown, experts believe the panic selling of cryptocurrencies is partly reflective of their increased popularity since January when the draft bill was first proposed.
It is estimated that there are nearly 20 million crypto investors in India, with total crypto holdings of around 40,000 crore rupees (which equates to around $5.39 billion). First-time investors, including ones from tier-2 and -3 cities, make up a large part of India’s cryptocurrency ecosystem and they are now worried, founder and CEO of one of India’s biggest cryptocurrency exchanges WazirX, Nischal Shetty said.
“Since the description (of the bill) is the same as January 2021, there is a lot of panic in the market…right now everyone’s pre-empting,” explained Shetty.
The description about the proposed regulations in the Lok Sabha bulletin, the same as it was in the earlier version issued in January, says:
“To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
The description implies that all private cryptocurrencies like bitcoin, ethereum, tether, and ripple will be banned. Such a move would force cryptocurrency exchanges to shut down in India.