Tuesday, April 24, 2018

Bitcoin, Ripple rise sharply again: Is there a way to invest despite RBI clampdown?

Crypto players say that there is still a possibility of taking positions in India without making or receiving payments in actually currency.

After a massive decline in prices since the beginning of the year, cryptocurrencies have shown substantial rise once again during April with reports suggesting that Bitcoin rose 36 per cent during the month and coming close to $10,000. It had slipped to $6500 levels at the beginning of the month.

Other big names in the crypto market rose at a faster pace in April. While Ethereum gained 56%, Ripple moved higher by 68%.

Are you as Indian investor wanting to join the party but sitting on the sidelines watching helplessly ever since the Reserve Bank of India in its credit policy earlier this month clamped down on crypto exchanges by directing its regulated entities not to deal with virtual currency exchanges?

Well, crypto market players say that there still is a possibility of taking positions in the cryptocurrencies in India. This has to be done without making or receiving payments in actual currency.

“RBI’s decision will surely increase the friction of transactions carried out through the Indian exchanges, but it isn’t an end to the crypto markets in India although there might be a shift in the modus operandi. There is possibility to trade crypto-to-crypto and not fiat (money)-to-crypto. The logistics of this will have to be re-visited since if you’re transacting through an Indian exchange, you need to have an Indian bank account. Else, the businesses will shift offshore, and only those Indians that have foreign bank accounts in the relevant country will be able engage in fiat-to-crypto and crypto-to-fiat trading. This will all of course depend on the laws of the foreign traders/account holders etc,” Varun Satyam, CBO, Almora, a cruptocurrency investment banktold Moneycontrol.

Satyam believes those who already have positions in cryptocurrencies can consider holding on to their positions till a finality is reached on litigation filed against the RBI directive. “Should Investors who truly believe in the idea of cryptocurrencies would still continue holding them. The other two ways down the line at present, either cash out or continue trading, but both options have their caveats. If they want to cash out, there is a possibility that the crypto markets would get flooded as many people might look to cash-out, and there may not be enough buyers which will drive prices downward. So holding on to their investments for markets to mature is one probable solution,” he said.

Several cryptocurrency platforms have approached the courts against RBI’s recent clampdown. “Industry stakeholders are discussing the issue with groups such as the Blockchain And Cryptocurrency Committee of India and the Internet and Mobile Association of India to quickly come up with feasible solutions for the current market situations. The government might have to retract on its stand like it happened in Korea else the cash OTC market will continue to flourish. If the government stands firm on their decision then these entities will have to eventually pivot their business model from crypto-fiat to crypto-crypto hence omitting the fiat part in totality,” Satyam said.

Other crypto players feel that proper regulation of the market will help the cryptocurency market to grow in the long run. “Nations in large numbers are bringing regulations because of which stability and awareness will come in market and hence more people will enter cryptocurrency,” Bharat Verma, Founder and CEO, Pluto Exchange said.

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