Regulatory discussions in India around a crypto ban caused panic selling on major crypto exchange WazirX, resulting in a massive price drop for leading cryptocurrencies, including Bitcoin (BTC) and Ether (ETH).
Crypto prices in India crashed soon after parliament announced to introduce and list 26 new bills in the Winter Session, which included the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. As Cointelegraph reported, the bill seeks a legislative vote on creating an official digital currency while imposing a ban on “all private cryptocurrencies,” starting on Monday.
A mass sell-off on WazirX on Wednesday morning at 3:30 am UTC tanked the price of Bitcoin from nearly 4,600,000 Indian rupees ($61,820.73) to 3,917,659 rupees ($52,650.55), a drop of 14.8% within two hours. Similarly, other popular tokens, including Ether and Cardano (ADA), experienced double-digit price depreciation locally on the exchange.
Speaking to Cointelegraph, WazirX CEO Nischal Shetty highlighted that the Indian crypto market usually trades at a premium compared to the global market:
“This event of panic selling has led the Indian market to correct and the prices to reach the global level.”
Shetty also pointed out the various use cases of cryptocurrencies as an asset or utility and quoted former Finance Secretary of India Subhash Chandra Garg’s suggestion that “there should be a prohibition on the ‘currency’ use case of crypto,” if any.
Jay Hao, CEO of crypto exchange OKEx, told Cointelegraph about the need for a nuanced approach toward regulating crypto assets in India:
“India is home to the highest number of crypto owners in the world, and the onus lies on the government to protect the interest of a large number of crypto investors in the country.”
Commenting on India’s crypto ban, BTC Markets CEO Caroline Bowler said, “This ban won’t work in the long-term and would be a step backwards,” adding that “banning is not an option to protect investor interest.” Bowler stated:
“The thing with cryptocurrency is that while governments may try to ban it or try to contain it, the very decentralized nature of the technology somewhat prohibits that.”
Indian blockchain investor Evan Luthra supported Bowler's thought process, telling Cointelegraph that it is impossible for governments to limit access to cryptocurrencies, "by design its impossible to do that." Citing El Salvador's rapid infrastructure development amid Bitcoin's mainstream adoption, the young entrepreneur believes that the Indian government will be forced soon enough to accept and deal with cryptocurrencies:
"It happened with the public first, then the banks and now the government will also need to learn and deal with cryptocurrencies in a future of metaverses."
As a final word of advice to Indian inventors, Shetty believes in the need to have faith in our lawmakers. “Let’s not panic,” he concluded.
Related: Right-wing Indian group calls for stricter crypto regulations
This comes after a parliamentary panel discussion on cryptocurrency on Nov. 15 where a plurality of regulators concluded that, although crypto can’t be stopped, it should be regulated more heavily.
In August, a representative from the Reserve Bank of India said that it planned to commence preliminary trials for a central bank digital currency before the end of 2021. India is currently one of the largest markets in the world with over 20 million crypto investors.