Bitcoin was down by over 7 per cent on Friday – REUTERS
Central bank action caps Beijing’s crackdown over the past year;
Cryptocurrency investors and exchanges went into a tizzy on Friday after China’s central bank announced a blanket ban on all cryptocurrency transactions and mining activity in that country.
China is not only one of the world’s largest cryptocurrency markets but also a country where crypto mining happens on a big scale.
While Bitcoin and other cryptocurrencies’ valuation tumbled in the global market following the People’s Bank of China’s decision, the development could have ramifications for the nascent Indian cryptocurrency market. While the Reserve Bank of India has already expressed its reservation in allowing cryptocurrency, the government is yet to announce its stance on the issue.
Sathvik Vishwanath, co-founder of cryptocurrency exchange Unocoin, said: “This ban by China will be one of the factors considered by the government when it finalises the proposed Cryptocurrency Bill. But given the focus on globalisation and digitisation, we need to allow cryptocurrency as an industry to continue to grow.”
Bitcoin was down by over 7 per cent on Friday after 10 agencies, including China’s central bank, said all cryptocurrencies, including Bitcoin and Tether, are not fiat currency and cannot be circulated on the market. This created a ripple effect as Ethereum’s price dropped 11.6 per cent and other cryptocurrencies followed a similar trend.
Chinese authorities have been cracking down on cryptocurrencies over the past year. But Friday’s announcement is the clearest indication yet that Beijing wants to shut down cryptocurrency in all its forms, including its trading.
Short-term correction seen
Kazim Rizvi, Founding Director, The Dialogue, told BusinessLine: “The global crypto market is bound to go through a short-term correction as China has the largest concentration of miners in the world and this decision will create negativity in the market.”
Indian crypto exchanges, however, are braving it out. Sharan Nair, Chief Business Officer, CoinSwitch Kuber, told BusinessLine:“China has already cracked down on mining and most of it has moved out. This is a temporary setback and we do not see this having a long-term or significant impact on the global market or the trading volumes. Indian investors will be impacted the same way as global investors, and this development has no direct correlation with the Indian market, in particular.”
Nischal Shetty, CEO, WazirX, hoped that India will take a different approach. “Countries around the world are working towards crypto positive regulations and I’m confident that India will not take a regressive approach that could push us behind by decades. Crypto has great potential to create more opportunities and contribute to our $5-tillion economy vision.”
Kapil Rathi, Co-Founder and Chief Executive Officer, CrossTower, said that China’s actions have given India an opportunity to be at the forefront of crypto and capital markets. “Just as the US has benefited from China’s crackdown on miners and crypto, India is poised to come out ahead by attracting Chinese crypto-related businesses and activities. The US benefited incredibly from the internet. This type of growth, prosperity, and leadership with this new technology are opportunities for India in the next decade,” Rathi said.