Cryptocurrencies take a hit over govt’s move to ban all private tokens

Cryptocurrencies on Indian exchanges recorded a steep decline following the government's decision to ban all private tokens, with many of the view that the law could bring about much-needed regulation.

Cryptocurrencies take a hit over govt’s move to ban all private tokens

Wednesday November 24, 2021,

2 min Read

Cryptocurrency exchanges in India witnessed frenzied activity on Wednesday with prices of these tokens recording steep decline and app crashing as a reaction to the government's decision to introduce a Bill in the Parliament that will ban all private digital currencies.

The value of cryptocurrencies like Bitcoin, Ethereum, Dogecoin, and Polkadot fell more than 10 percent on early trade before making certain recovery. Bitcoin was down about 8.68 percent at around 1:30 pm, and Shiba Inu was down close to 16 percent.

The government on Tuesday announced it would introduce the bill in the forthcoming winter session of Parliament with the purport:

“To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

This also led to panic selling which resulted in the crash of crypto exchange WazirX, with the app later restored.

This also led to reactions on Twitter with Zerodha founder Nikhil Kamath expressing his concerns regarding the bill. “Is the Indian govt banning cryptos? What happens to everything in circulation already,” he queried on Twitter.

There is an understandable panic reaction among investors, given the investments they have made into these digital currencies. However, many were of the view that the government has taken the right decision to regulate cryptocurrencies.

“I am a strong proponent of governments putting regulations on cryptos. There are 20-30 cryptos with an understandable use case for their crypto offering; however, there are more than 10,000 cryptocurrencies! Therefore, a well-drafted and clearly laid out regulation on cryptos will make it easier for crypto innovators to devise currencies with proper use cases and give security to investors that want to invest in them,” said Anirudh A Damani, Managing Partner, Artha Venture Fund.

There is also the view that the proposed regulations could attract taxes on transactions, given the gains made through cryptocurrencies.

Manoj Dalmia, CEO, Prossetz Exchange said, “This may not be a negative comment but a welcoming and insightful thought emphasised by our PM Narendra Modi that genuine and eligible players and exchanges must work together under government regulation and guidelines to ensure that cases of fraud and deception are mitigated and a clear view of policies can guide Investors towards genuine investment opportunities and platforms.”

Edited by Kanishk Singh

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