RBI clampdown puts cryptocurrency traders, exchanges in a spot

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

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said. Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm

Credit card spending growth declines on RBI gaze, stress build-up

Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem. “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and

CA Online

Search This Blog