Capital, people, and the ideas they create flow to where they are treated the best. If more restrictive regimes choose to crack down on these items, free-market economies should move to the embrace them with open arms.
Mumbai – India plans to introduce, evaluate and enforce a bill to prohibit “all private cryptocurrencies” in the country, according to a legislative agenda for the winter session.
The Indian government said Tuesday evening that the proposed law will permit “certain exceptions” to promote the underlying technology of cryptocurrency and its applications.
The bill — called Cryptocurrency & Regulation of Official Digital Currency Bill 2021 — will also create a “facilitative framework” for the creation of the official digital currency for the country, the legislative agenda adds.
It’s worth pointing out that the description of the bill is identical to the one New Delhi listed for the previous parliamentary session earlier this year. The winter session of the parliament starts November 29.
Lawmakers in India have for several quarters been discussing risks of cryptocurrency trading and trialing a central government-backed digital currency.
An increasingly growing number of Indians, many of whom have never invested in the stock market or any other asset class, have started to trade cryptocurrencies in recent quarters, prompting concerns among some that they might end up losing their money.
Local cryptocurrency exchanges have reported growing volumes of transactions and user bases this year and raised record capital from high-profile investors. CoinDCX, backed by B Capital, and CoinSwitch Kuber, backed by a16z and Coinbase Ventures, became unicorns this year.
India’s Prime Minister Narendra Modi, and several other lawmakers as well as several industry stakeholders have held several meetings in recent quarters to discuss the cryptocurrency space and some of the recent developments.
At least one top Indian minister recently held conversations with a prominent venture capitalist and suggested that India is likely to formulate a law that will support innovation following China’s decision to ban cryptocurrency trading and mining, according to a source directly familiar with the matter.
Many lawmakers, in the meanwhile, have also expressed concerns about the nature of ads carried by cryptocurrency exchanges. A consensus was reached in that meeting that these “irresponsible advertisements”, which promised wild profits to consumers by investing in crypto, were misleading youths in the nation and must be stopped, TechCrunch reported earlier.
Several Bollywood stars, including legendary Amitabh Bachchan, Ayushmann Khurrana and Ranveer Singh, who have starred in several of the country’s biggest blockbusters, have promoted cryptocurrency trading in TV and newspaper ads.
Lawmakers have also expressed concerns around potential misuse of using crypto trading vehicles for laundering money and financing terrorism efforts.
Shaktikanta Das, governor of the central bank Reserve Bank of India, said last week that the country needs to have much deeper discussions on the issue of cryptocurrencies.
“When the central bank says that we have serious concerns from the point of view of macroeconomic and financial stability, there are far deeper issues involved,” Das said at an event. “I’m yet to see serious, well-informed discussions in the public space on these issues.”
Speculation that bitcoin would be used by investors as a hedge instead of gold looks unlikely despite horror US inflation.
The price of bitcoin has trended lower this week, falling from a high of $US62,440 ($A86,398) last Tuesday to $US55,783 ($A77,187) yesterday.
The crypto did claw back some ground today, edging to $US56,795 ($A78,587).
When October’s shocking US inflation figures flashed on November 11 – a 6.2 per cent increase in the cost of living – cryptos surged.
Bitcoin briefly passed the $US69,000 ($A95,000) barrier. Since then, bitcoin has plunged nearly 20 per cent.
That means the inflation-hedge narrative “should come with some very big caveats,” currency strategist at UBS James Malcolm told Business Insider. “It’s not a robust way of thinking about things.”
Bitcoin’s weakness has also been attributed to the strengthening US dollar.
Despite the sell-off, some of the money might be moving from bitcoin to the smaller altcoins.
“Despite a bit of turbulence, this is still technically a bull market,” CEO of Quantum Economics Mati Greenspan told Bloomberg.
“So money coming off the large cap coins can easily find its way into some of the smaller ones.”
Zcash is up for the week, as is Avalanche.
Bitcoin is also up 212 per cent for the year and up 7546 per cent for the past five years.
The global crypto market capitalization is $US2.46 trillion ($A3.4 trillion). Bitcoin alone is valued at a stunning $US1.075 trillion ($A1.49 trillion).
However, former US secretary of state Hillary Clinton issued a warning about bitcoin at Bloomberg New Economy Forum in Singapore recently.
She cautioned the crypto could be “undermining the dollar”.
“What looks like a very interesting and somewhat exotic effort to literally mine new coins in order to trade with them has the potential for undermining currencies, for undermining the role of the dollar as the reserve currency, for destabilizing nations, perhaps starting with small ones but going much larger,” she said, Forbes reported.
She said nation-states needed to start paying “greater attention to … the rise of cryptocurrency.”
Australian Securities and Investments Commission (ASIC) chairman Joe Longo this week also warned people about investing in crypto.
He said consumers were “on their own” because of limited regulatory protections.
The implications for consumers are potentially huge,” he said, the Sydney Morning Herald reported.
“It is almost an article of faith that no one should invest in something they don’t understand.
“Who among us can say they really understand crypto-assets and cryptocurrencies?” Mr Longo told the Financial Review’s super and wealth summit.
He said investors should view crypto with great caution, citing the maxim, “Don’t put all your eggs in one basket.”