BENGALURU: On April 6, the RBI sent out a circular against trading or doing any kind of business in virtual currencies or cryptocurrencies such as Bitcoins. A period of three months was also given to all such entities to exit any such business relationship.
The same day, Ravindra Prasad (name changed) a crypto trader sent out a query to his crypto community in Bengaluru and elsewhere about various options to cash out before the time period.
Ravindara is not alone as there is a general sense of anxiousness and uncertainty among many like him who have invested in cryptocurrencies. While virtual currencies and cryptocurrencies is a fairly new phenomenon in the country, there was more or less a general sense of positivity till a few months back.
Ravindra says, "Many traders like me are eager to sell their coins within the stipulated time period. The market does not look good for now. Although its not a very easy proposition to sell of coins through third party arrangements it is however not impossible."
The end of last year saw a surge of interest and news about cryptocurrency, particularly Bitcoins. There were even reports of people turning millionaires overnight in various parts of the world due to the surge in the value of cryptocurrencies.
However fast forward only four months into 2018 and crypto traders are of the opinion the enthusiasm has died down a great deal in the country mainly because of the government's continuous interventions.
"Till about December last year the value of one Bitcoin was as high as `14 lakh. Now it has come down to around `5 Lakh. Back in 2013 when it was really new and people were just getting into this, the value was around `7000. So most of the present high value of cryptos has come only in the last four or five months. At present as a trader I am not so sure what will happen in the next four or six months," adds Ravindra.
Others like Aditya Sharma, who started out as a crypto trader and eventually started a blockchain (technology that's the foundation of cryptocurrency) services firm, Cryptoanalytics, are anxious no doubt but feel that better days will come. "The latest government circular is bound to affect those who are looking for short term returns. During the hype, a number of people invested in cryptocurrencies and Bitcoins. For such people who may have invested around Rs two to five lakhs, its definitely a problem because there is no knowing what the next few months will be. Say a person who has taken a loan and invested and wants to get back his money, it is surely a problem," he says.
New businesses to be impacted
According to Kaushal Chatterjee (name changed), a crypto trader and crypto evangelist, 80 percent of the trading in cryptocurrency in Bengaluru has taken place in the last one year. Most of them are in stocks with also options in forex trading or directly into cryptotrading. "Most of the people who are affected due to the latest government move are 'panic selling.' They invested just for the profits and now see their investment getting lost," he adds.
As one of the immediate affects of the latest government move, Kaushal says, "Trading in INR will go off. Small exchanges based on INR will close down. The bigger exchanges will move to USD. Peer-to-peer transactions is also bound to go up." He adds that many of the crypto currency exchanges in Bengaluru itself are directly impacted. "The big ones will leave while holding offices in India. Others are wrapping up altogether and still others are staying and fighting," he says while adding that entrepreneurs in hundreds are trying to do something or another in the field of cryptocurrecny. "All of them are highly inconvenienced," he adds.
Many have already started a public campaign on online petition sites that have garnered thousands on signatures.
RBI wants monopoly
Ganesh Prasad Kumble, who works in a blcokchain tech firm minces no words when he says, "We are pretty much screwed." He adds that latest move by the RBI demonstrates authorities trying to choose a monopoly structure. "The RBI knows that not controlling virtual currency related related elements will simply undermine them." The murmurings of the RBI starting its own cryptocurrency called Lakshmi has further reinforced the above sentiments as highlighted above by Ganesh.
Whatever the enforcement by RBI, Ganesh says, cryptocurrecy related actors will continue to enforce their interest through RBI and non RBI regulated channels.
On the online petiton website, there are at least around 14 petitions on cryptocurrency. One of them, titled 'Announce bitcoins and cryptocurrencies as legal' has already been signed by over 1.25 lakh people.
The RBI has been sending circulars cautioning against cryptocurrency since 2013. It sent the first on December 2013, then on February and December 2017 and then finally the latest on 8 April 2018.