NEW DELHI: The cryptocurrency markets in India recovered after falling by over 20 per cent in the early morning on Wednesday after the news that the government may present a bill in the parliament to ban most digital currencies in India.
Most well-known cryptocurrencies at the time of writing the article were trading 8-12 per cent lower than 24 hours ago. Bitcoin prices fell by Rs 5 lakh, or 12 per cent, in the past 24 hours. Bitcoin was trading around Rs 40 lakh level at the time of writing this article. Early morning, Bitcoin prices had fallen to Rs 34.23 lakh levels before recovering some losses to trade around Rs 40 lakh levels.
Ethereum was trading at Rs 3 lakh after losing 9 per cent in the past 24 hours. Another popular cryptocurrency which is known for sharp movements - Shibu Inu - had fallen by almost 19 per cent in the past 24 hours.
The government is going to table the Cryptocurrency Bill in the winter session of parliament. The bill seeks to "create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India".
However, the Bill also seeks to prohibit all private cryptocurrencies in India. It also allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.
The news has led to widespread panic among investors, many of whom rushed to pull-out their investments. As per reports, websites and apps of some crypto exchanges crashed after the reports of the bill became viral.
However, the recovery shows that there is still some doubt that the government may go on to ban all cryptocurrencies.
Sathvik Vishwanath, co-founder & CEO, Unocoin, one of the country’s oldest bitcoin trading platforms, says that there is no exact definition for private cryptocurrency, and it is anybody's guess which regulator would define private cryptos.
"It could be one of multiple things. If it is managed by a particular founder or a company or a fund, we can call it private. Or whatever is not issued by the government, they could be called private," he says.
Vishwanath feels that the agenda of the bill, which could not be tabled in the parliament in the last session, remains unchanged, and the same has come for reconsideration in the next session. However, he feels it is important to know the content of the bill and not the ‘unchanged’ agenda or title of the bill.
Subhash Chandra Garg, former secretary, department of economic affairs, ministry of finance, also has similar views. "Only the object of the Bill has been put out in the public domain, not the bill. It is going to be extremely challenging for the Government to ensure that it does not end up throwing the baby with the bath water," he says.
He further says that cryptocurrencies don’t function and provide services as currencies only. "When you ban crypto currencies, what exactly do you ban or what are the permissible exemptions," Garg asks. India is one of the major crypto markets with over 100 million investors. The year 2021 saw a sharp jump in the number of investors.
One of the crypto exchanges WazirX has recorded a trading volume of over USD 36 billion in 2021 with an average of 44 per cent month-on-month growth. The platform witnessed