HYDERABAD: With the prices declining, it seems to be the right time to invest in cryptocurrencies. However, the latest move of Reserve Bank of India (RBI) directing banks to stop services to cryptocurrency exchange houses has left the exchange houses and traders in a tizzy. While exchange houses are upset for being left out of the decision making process, investors and traders feel the future of cryptocurrency in India could be grim.
There has been an increasing interest among people in the city, of late, to trade in cryptocurrencies. In fact, several institutes offering courses in Blockchain technologies have mushroomed across Hyderabad. “Instead of giving regulatory guidelines, the central bank has taken an easy way out by imposing a blanket ban on cryptocurrency trading,” says Blockchain evangelist and investor Vivek Prasanna. “This will put our country in the back seat, with regards to creation of better use-case scenarios, especially on scalability and speed of Blockchain transactions.”
Advanced economies, on the other hand, have put a regulatory framework in place. The US Department of Financial Services, for instance, issues BitLicense to authorise cryptocurrency activities. “The government should have initiated fair trading practices and policies,” says Nischal Shetty of WaxirX, a Bitcoin exchange house. “Options like Know Your Customer (KYC), Anti Money Laundering (AML), cybersecurity, data retention, and customer protection practices are existing measures that could have been used,” he pointed.
Central bank’s move, experts feel, is likely to increase peer-to-peer (P2P) exchanges, which is already a popular mode of cryptocurrency trading. P2P exchange is a software operated platform where users can directly trade with each other without any intermediary. “People can choose peers through social media groups that are infamous for these activities, meet them offline and conduct cash transactions in return for cryptocurrencies,” says city-based blockchain meet-up organiser Sachin Yadav.
Exchange houses have begun talking to distressed customers who are likely to shift to other modes of trading. “Our support team is making sure that customers do not panic and go out of our business,” says Hesham Rehman, CEO of cryptocurrency exchange firm Bitxoxo. Interestingly, the RBI has thrown a bone for enthusiasts by saying it’s looking to introduce its own virtual currency. Will that click in the market? We have to wait and see.
‘RBI pushing investors to black markets’
Fear, uncertainty and doubt (FUD) fails to make an impression upon cryptocurrency investors in Hyderabad even as the value of major cryptocurrency tanked on Friday following the Reserve Bank of India’s (RBI’s) policy statement on Thursday. Investors now have two options: to get out or move their investments offshore. Those from the sector warn that this move by the RBI will also force future investors into the black money market.
RBI to introduce virtual money?
The RBI has thrown a bone for enthusiasts by saying it’s looking to introduce its own virtual currency.