Bitcoin, ethereum and other cryptos have become more popular in India following a bank ban of crypto exchanges according to the current crypto prices in the world’s second most populous country.
One bitcoin is trading at around ₹490,000 at Zebpay, one of India’s biggest crypto exchange. That translates to a price of $7,100 per bitcoin.
While one eth is currently trading at nearly ₹34,000, or $492. In the west, however, one bitcoin is currently at $6,300, while eth is at $430.
The Central Bank of India banned commercial banks from serving crypto exchanges in a notice issued on April 6th 2018 which took effect on July 5th. A day prior, Zebpay said:
“Today we are disabling the rupee deposit and withdrawal options on the Zebpay app. This is being done in light of the bank account closures as per the RBI guideline.
INR deposits and withdrawals have been paused in the Zebpay app until banks allow us again. But please note: Coin/Token deposits and withdrawals are on, crypto-rupee and crypto-crypto pair trading is on.”
This suspension of Indian fiat withdrawals and deposits would lead to a sell off in the country, you’d think, but the opposite appears to have happened.
Indians may well be thinking this is all just temporary and perhaps the ban might have been a step taken ahead of their central bank potentially devaluing their money again. So they might want cryptos now more, rather than less, at least if the price premium is to tell us anything.
One could argue that if fiat withdrawals are not possible, but crypto withdrawals are, then they have little choice but to buy. So the price premium might be more due to technical mechanics. But it could also be because a u-turn appears afoot.
“Trade is not a criminal offence. Most of us trade in various asset classes in the stock market. So how is this (cryptocurrency trading) any different?” So says a senior government official privy to the discussions of a panel set-up to study cryptos, according to Quartz. The source further said:
“I don’t think anyone is really thinking of banning it (cryptocurrencies) altogether. The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as a commodity may let us better regulate trade and so that is being looked at.”
That suggests the central bank has jumped the gun. Apparently they undertook no study on cryptos and seemingly went only by negative news reports. That decision is now being challenged with the Supreme Court to hear the matter on July 20th, but they’ve given no respite until then.
Unlike the strictly controlled Chinese market, however, with their firewalls and censorships, India is quite more open.
So a ban there wouldn’t really work because Indians can probably open a crypto account in any global exchange, so sell and buy cryptos for dollars and then perhaps convert those dollars into Indian money or vice versa.
A ban would however probably encourage blockchain and crypto related businesses to leave the country, denying them much talent, and much investment.
Making it probably one of the biggest mistake for the developing nation, but we’ve seen this story before. Clueless bureaucrats and politicians, listening to their banking lobbies, start out with a hostile attitude towards cryptos.
Then, as they learn more about the industry and as they see all the fine and very innovative things going on in this space, they u-turn.
SEC did. The French minister did. South Korea did. Russia did. China would have done too if their people had a little bit more freedom of speech. India certainly should.