The government’s plan to ban all private cryptocurrencies in India has spooked investors with prices of the world’s oldest cryptocurrency bitcoin trading at a steep discount of up to 20% against a premium of 10% in the last few days.
The government on Friday had listed a bill, which proposes to ban all private cryptocurrencies in India — such as bitcoin, ether, ripple — in the legislative order of business for the Budget Session of 17th Lok Sabha.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 also stated that certain exceptions to promote the underlying technology of cryptocurrency and its uses would be allowed.
“Due to the fact that a cryptocurrency draft bill leading to its ban has got listed in the items for discussion during this budget session, the entire industry is in panic. We have seen some panic selling as well, which has led to reduced prices of cryptocurrencies. Bitcoin and ether, which used to trade at 10% premium compared with global markets are now trading at 20% discount,” said Sathvik Vishwanath, co-founder and chief executive officer, Unocoin.
According to the expert, cryptocurrencies didn’t see any notable recovery despite the topic not coming up in the budget speech.
Bitcoin was trading marginally higher on Tuesday after hitting a high and a low of $34,715.66 and $33,150.73, respectively, over the past 24 hours. It was trading at $34,265 at 1.45 pm (IST) on Tuesday, as per data available with crypto exchange WazirX.
Last year, the Supreme Court of India had quashed a Reserve Bank of India’s (RBI) ban on crypto-related payments.
Industry experts also are hoping for government support. “The contents of the draft bill remain unknown, which is also adding to the panic of the community. India is known for following the footsteps of developed counties when it comes to technical innovation and it is the time for governments and regulators to look at how this has played out there more closely before making knee-jerk reactions,” said Vishwanath.
RBI earlier had also said that the apex bank is exploring a digital version of the rupee.
“We’re proud that the RBI is exploring a digital rupee built on a blockchain. Blockchain technology not only lowers costs, but it also improves accounting since it is an immutable ledger, which would give the government new tools to fight corruption. However, creating a government currency doesn’t require the banning of non-government crypto assets. On the contrary, safely including all aspects of this new technology will bring tremendous tax revenue and innovation,” said Rahul Pagidipati, chief executive officer at ZebPay.
In other cryptocurrencies, ethereum and tether were trading in the green by up to 8%, while stellar was down 5% in the red on Tuesday.