If there is anything that we have learned so far from cryptocurrencies especially this 2018, it is the fact that digital currencies are at the mercy of regulators. Gone are the days of unmonitored trading. Ever since Bitcoin climbed to near $20,000 during mid-December of 2017, things were quite rough for both Bitcoin and other altcoins.
The price of Bitcoin plunged by 11% today after Indian Finance minister Arun Jaitley mentioned in his budget speech that the government is doing everything it can in order to discontinue the use of Bitcoin along with other virtual currencies. He also reiterated that India doesn’t recognize these digital assets as a legal tender. However, he mentioned that he encourages blockchain technology in payment systems.
Bitcoin is currently at $9,071.56 as of writing things article while Ethereum is at $1,056.20. For a lot of investors, this has become alarming. In fact, many are already asking if it is already a crypto bubble that is happening.
“The government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities as part of the payment system”
One in Every Ten BTC Transactions
There were already speculations regarding the fate of cryptocurrencies in India over the last months. What makes this an important announcement is the fact that India is home to a large number of Bitcoin traders and investors. According to numbers, one in every ten Bitcoin transactions worldwide can be found in India.
Monish Panda, the founder of Monish Panda and Associates Law Firm mentioned that “The government will now either come out with a legislative mechanism or make suitable amendment in existing legislation to ensure that dealing and trading cryptocurrency is made illegal and to penalize entities and individuals who are involved in their trade and circulation”.
He also mentioned that “We will have to wait and watch as to what will be the final framework of such legislation”.
Brewing Concern on Cryptocurrency
Over the last few months, The Reserve Bank of India, as well as the government itself, expressed their concern on the growing popularity of Bitcoin and other cryptocurrencies. Late last year, it was even dubbed as a Ponzi scheme by the finance minister. It was mentioned that there was a risk of an investment bubble.
The government announced setting up a committee in order to understand the implications of having digital currencies in India. And with Jaitley’s statement today, this should put to rest doubts to what the government approach is going to be.
India isn’t the only one that has heightened their regulations against cryptocurrencies. In fact, China has widened their crackdown on cryptocurrency trading. It even made the effort of tracing areas with high electricity consumption in order to stop shutdown crypto mining operations. As of today, Indian cryptocurrency exchanges are still hoping that the Indian government will maintain some balance in its regulations.
Should you already be alarmed at this point knowing that more countries are having a strict stance on digital currencies? Is it really a crypto bubble that is already unfolding in 2018?