Skip to main content

RBI clampdown puts cryptocurrency traders, exchanges in a spot

By
 RBI clampdown puts cryptocurrency traders, exchanges in a spot
RBI’s decision, which was aimed largely at protecting interests of consumers, caused panic selling among crypto investors, traders in India
The Reserve Bank of India’s (RBI) recent crackdown on cryptocurrencies has left investors, traders, and crypto exchanges in a fix, prompting them to tap alternative means to convert their cryptocurrency into rupees and exposing them to the risk of losing their holdings, experts said.
RBI recently put out a circular forbidding entities it regulates from dealing with cryptocurrencies. Banks were given three months to settle all outstanding payments to crypto exchanges in India
While RBI’s decision was aimed largely at protecting the interests of consumers, the directive caused panic selling among crypto investors and traders in India. Exchanges in the country started exploring opportunities to register outside India to carry on trading.Nischal Shetty, chief executive of cryptocurrency exchange WazirX, said India’s decision didn’t affect the international market, but the domestic market saw a temporary slowdown.
“The day of the RBI announcement we saw about a 4X increase in our volumes. There was heavy panic selling. However, the international markets did not budge with this India news and within a day, the markets in India bounced back to being normal,” Shetty said.Rahul Raj, co-founder of another exchange named Koinex, said RBI’s decision caused a huge disruption in the domestic market.
“In such a precarious situation, users will be lured by grey market tactics to liquidate their digital assets and we fear that it will lead to small trade involving direct cash transactions between peers, leading to huge black market wherein people are forced to privately exchange coins for hard cash,” Raj said in an email.
Mohit Mamoria, chief executive of Authorito Capital, said RBI’s intervention was equal to a demonetization moment for crypto funds. Authorito Capital is a crypto fund based out of California, which invests in blockchain ideas.
According to Harsh Agarwal, chief executive of cryptocurrency advisory platform CoinSutra, many traders are moving to peer-to-peer (P2P) sites such as LocalBitcoins.com to exchange coins for the local currency. On these sites, the coin holder agrees to sell his coins online for a rate quoted by an anonymous buyer. The rates may not be based on current market trends
Apart from cryptocurrency traders, RBI’s intervention may also hit crypto miners, and developers working to build products around blockchain and cryptocurrencies. Miners are an essential part of popular coins like Bitcoin, Litecoin, and Dogecoin, since they validate transactions on the public ledger or a blockchain. Miners are given coins for validating each successful transaction.
All cryptocurrencies are built on top of blockchain technology. Currencies are just one way to use blockchain technology, among other examples such as shared power grids and decentralized management of public land records.Developers working with crypto exchanges and blockchain firms in India may also be affected.
“This lull in the market has also affected operational costs which bear heavy on the company…So we are looking to restructure our resource pool in such a way that we can accommodate the workload on the exchange and at the same time also utilize them on the slew of other blockchain products underway,” Koinex’s Raj said.
According to Mathew Chacko, Partner atSpice Route Legal, crypto miners and developers are aged between 25 and 30 years, and have already spent a lot of time and money building a career around blockchain technology. “I think crypto miners and developers may come together and approach courts on what appear to be legitimate grounds raising various constitutional challenges to the regulatory action,” Chacko said in a phone interview.
A study released by online job platform Indeed said that the number of cryptocurrency and blockchain related jobs posted on the Indeed website rose by 290% in the latter half of 2017, with Bengaluru emerging as the top city.
The Mint,New Delhi, 24th April 2018

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Offer’s for all of you

By
Great Bumper Dhamaka Offer’s for all of you... It's Time to see your Business Online, WebeCreator Offer Website Designing with domain & Email @ nominal charges. For a year For More information visit us http://goo.gl/KlpppF call on 9890151261/9773197533  drop a mail to sales@webecreator.com
Post a Comment
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more