Tag: Crypto Trading

A sudden and complete ban on crypto trading unlikely: Experts

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In a possible relief to investors, a sudden and complete ban by the government on cryptocurrencies is unlikely according to experts who point out that a brief transition phase would be needed.

“Disposing off cryptocurrency assets is not so easy. I don’t think it is practically possible to ban or dispose of existing cryptocurrency. A ban may have been possible a few years ago when things were getting started. In today’s situation, there would have to be regulations,” said Ajeet Khurana, Founder, Genezis Network.

Difficult to monitor

Further, the nature of cryptocurrency is such that it would be impossible to monitor if the ban is in place and there could continue to be peer-to-peer transactions.

Also see: Crypto should be allowed only as an asset: IAMAI

“A complete and sudden ban on cryptocurrency may not be possible because of the complex nature of crypto assets. The only way the government can monitor crypto-asset movement is through prevalent platforms. Once there is a ban, there will not be a system to monitor such transactions,” said Rashmi Deshpande, Partner, Khaitan & Co.

10 crore investors

The government expected to table The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the Winter Session of Parliament The bill is expected to call for a complete ban on crypto trading and investments and so, there has been a lot of panic selling by investors.

India holds over ₹6 lakh crore in crypto assets. The country is also home to about 15 home-grown cryptocurrency exchange platforms consisting of more than 10 crore investors, according to a note by Motilal Oswal.

Breathing room

While the huge amount of funds invested in crypto at present is not a defence, people would need some breathing room to offload it, Deshpande said, adding that many companies and countries do accept cryptos and a complete ban would impact the competitiveness of Indian business globally.

Also see: Crypto prices stable in India as investors await details of new Bill

Experts point out that even previous versions of the cryptocurrency bill floated by the government had given a 90-day transition period for cryptocurrency holders.

Large ecosystem

According to Mikkel Morch, Executive Director and Risk Management at ARK36 (a crypto and digital assets hedge fund), an outright ban on such investments might be difficult to implement.

“The digital asset ecosystem in India extends far beyond cryptocurrencies and includes other investable assets such as NFTs which are becoming increasingly popular in India,” Morch said.

Regulation required

However, experts agree that some amount of regulation is required.

Also see: Scammers stole “millions” in cryptocurrency in last month: Report

“It is also necessary to bring about regulations for platforms and for investor protection,” Deshpande said, adding that we must wait for the proposed Bill to be tabled before jumping to any conclusions.

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India to consider allowing crypto trading for some investors, BFSI News, ET BFSI

Personal Finance

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India is considering a proposal to treat cryptocurrencies as a financial asset while safeguarding small investors, according to people familiar with the matter.

The discussions come as authorities race to finalize a bill Prime Minister Narendra Modi’s government wants to present to parliament in the session starting Nov. 29. The legislation may stipulate a minimum amount for investments in digital currencies, while banning their use as legal tender, the people said, asking not to be identified as no final decision has been taken.

Policy makers left themselves some wiggle room when they posted a description of the bill on parliament’s website late Tuesday, by saying the bill seeks to prohibit all private cryptocurrencies except “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

The uncertainty triggered a sell-off on Wednesday in cryptocurrencies including Shiba Inu and Dogecoin, which were at one point down more than 20 per cent in trading on the WazirX platform, one of India’s leading cryptocurrency exchanges. They were far less affected on trading platforms such as Binance or Kraken.

A spokesman for the finance ministry couldn’t be immediately reached for a comment.

The Reserve Bank of India wants a complete ban on digital currencies as the central bank feels it could affect the nation’s macroeconomic and financial stability. While the government is considering taxing gains from cryptocurrency in the next budget, Governor Shaktikanta Das last week said the country needs much deeper discussions on the issue.

The Prime Minister’s Office is actively looking at the issue, and once the contents of the bill are finalized it would be taken to the Cabinet for its approval, the people said.

Earlier this month, Modi held a meeting on cryptocurrencies, after which officials said India wont let unregulated crypto markets become avenues for money laundering and terror financing. Later, in a speech last week, he urged democratic nations to cooperate in regulating private virtual currencies failing which they could land up in the “wrong hands”.



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What’s new in China’s crackdown on crypto?, BFSI News, ET BFSI

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China‘s most powerful regulators have intensified the country’s crackdown on cryptocurrencies with a blanket ban on all crypto transactions and crypto mining.

The move sent bitcoin and other major coins lower, as well as pressurising crypto and blockchain-related stocks.

What’s new?

Ten Chinese agencies, including the central bank and banking, securities and foreign exchange regulators, have vowed to work together to root out “illegal” cryptocurrency activity.

While China has been putting in place increasingly stricter rules on virtual currencies, it has now made all activities related to them illegal and sent a signal of intent they plan to get even tougher on enforcing the rules.

China’s central People’s Bank of China (PBoC) said it was illegal to facilitate cryptocurrency trading and that it planned to severely punish anyone doing so, including those working for overseas platforms from within China.

The National Development and Reform Council (NDRC) said it would launch a nationwide crackdown on cryptocurrency mining as it tries to phase the sector out entirely.

What’s come before?

China does not recognise cryptocurrencies as legal tender and the banking system does not accept cryptocurrencies or provide relevant services.

In 2013, the government defined bitcoin as a virtual commodity and said individuals were allowed to freely participate in its online trade.

However, later that year, financial regulators, including the PBoC, banned banks and payment companies from providing bitcoin-related services.

In September 2017, China banned initial coin offerings (ICOs) in a bid to protect investors and curb financial risks.

The ICO rules also banned cryptocurrency trading platforms from converting legal tender into cryptocurrencies and vice versa.

The restrictions prompted most such trading platforms to shut down with many moving offshore.

The ICO rules also barred financial firms and payment companies from providing services for ICOs and cryptocurrencies, including account openings, registration, trading, clearing and liquidation services.

By July 2018, 88 virtual currency trading platforms and 85 ICO platforms had withdrawn from the market, the PBOC said.

Why does it keep tightening the rules?

The huge run-up in price in bitcoin and other coins over the past year has revived cryptocurrency trading in China, with investors finding ways round the existing regulations. That’s come as the country is trying to develop its own official digital currency, becoming the first major economy to do so.

Earlier this year, Chinese regulators tightened restrictions that banned financial institutions and payment companies from providing services related to cryptocurrency. An industry directive said that speculative bitcoin trading had rebounded and was infringing “the safety of people’s property and disrupting the normal economic and financial order”.

Many Chinese investors were now trading on platforms owned by Chinese exchanges that had relocated overseas, including Huobi and OKEx. Meanwhile, China’s over-the-counter market for cryptocurrencies has become busy again, while once-dormant trading chartrooms on social media have revived.

China-focused exchanges, which also include Binance and MXC, allow Chinese individuals to open accounts online, a process that takes just a few minutes. They also facilitate peer-to-peer deals in OTC markets that help convert Chinese yuan into cryptocurrencies.

Such transactions are made through banks, or online payment channels such as Alipay or WeChat Pay, though these have since promised to conduct due diligence on clients and set up monitoring systems targeting key websites and accounts to detect illegal crypto-related transactions.

Retail investors also buy “computing power” from cryptocurrency miners, who design various investment schemes that promise quick and fat returns.

What’s the impact of the crackdown?

While cryptocurrencies fell on Friday, the fall was less pronounced than the slide seen in May when China’s State Council, or cabinet, vowed to crack down on bitcoin mining.

The test will be whether China is able to find and punish platforms and people breaking the rules.

Some analysts said that based on what’s gone before, determined investors would still likely find a way to trade.

“While retail traders in China may no longer be able to access online exchange platforms that are now illegal, crypto funds may be able to move management of their funds offshore,” said Ganesh Viswanath Natraj, Assistant Professor of Finance at Warwick Business School.



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Bitcoin slips after China central bank vows to crack down on crypto trading, BFSI News, ET BFSI

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Bitcoin fell nearly 5 per cent on Friday after China’s central bank said it would crack down on cryptocurrency trading, banning overseas exchanges from providing services to mainland investors.

The largest cryptocurrency was last down 4.6 per cent at $42,874, with smaller coins that typically trade in tandem with bitcoin also tumbling. Ether fell over 8 per cent while XRP slipped 7 per cent.

The People’s Bank of China also said it will bar financial institutions, payment companies and internet firms from facilitating cryptocurrency trading, and will strengthen monitoring of risks from such activities.

“Crypto markets are in an extremely frail state overall, and these sorts of downswings speak to that; there’s a degree of panic in the air,” said Joseph Edwards, head of research at cryptocurrency broker Enigma Securities.

“Crypto continues to exist in a grey area of legality across the board in China.”

Shares in cryptocurrency and blockchain-related firms also came under pressure with U.S. listed miners Riot Blockchain , Marathon Digital and Bit Digital slipping between 4.1 per cent and 5.1 per cent in premarket trading. China-focused SOS slipped 1.2 per cent while crypto exchange Coinbase Global fell 2.7 per cent.

Earlier this year, Chinese authorities said they would crack down on cryptocurrency mining, sparking a massive sell-off of bitcoin and other coins.

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Cryptocurrency trading volumes slump 40% in June, data shows, BFSI News, ET BFSI

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LONDON: Trading volumes at major cryptocurrency exchanges fell by more than 40 per cent in June, research showed on Monday, with a regulatory crackdown in China and lower volatility among the factors depressing activity.

Spot trading volumes fell 42.7 per cent to $2.7 trillion, with derivative volumes down 40.7 per cent to $3.2 trillion, London-based researcher CryptoCompare’s data showed.

“Headwinds continued as China persisted with its crackdown on bitcoin mining,” CryptoCompare said. “As a result of both lower prices and volatility, spot volumes decreased.”

Bitcoin, the largest cryptocurrency, fell more than 6 per cent last month, touching its lowest since January, as authorities in China tightened restrictions launched a month earlier on bitcoin trading and mining.

It had tumbled 35 per cent in May, with its losses sparked by Beijing’s moves to rein in the fast-growing sector. Crypto trading volumes tend to spike during periods of extreme price swings.

Major cryptocurrency exchange Binance, which has faced scrutiny from regulators across the world, retained its position as biggest platform by spot trading volume, CryptoCompare said. Still, volumes at Binance fell 56 per cent in June to $668 billion.



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