By Eli Ridder | @EliRidder
After India’s government decided in early April to block official financial institutions from carrying out formal cryptocurrency transactions, trade activity has increased with strength.
Reports citing exchange operators, investors and observers say that Indians are quickly taking advantage of the three-month window given by the Reserve Bank for institutions to cut off cryptocurrency traders and exchanges.
Those that invest now are able to convert digital funds into the formal rupees currency and rupees into crypto, which can later be switched for other coins via the private trading platforms well established locally and internationally.
Prices of the unstable Bitcoin in India are back up to 618,000 rupees or $9,570 USD, recovering from a low of 350,001 rupees after the central bank’s announcement in early April.
Several investors, according to Reuters news agency, are holding out that New Delhi will curl back on their crypto legislation and instead regulate the cryptocurrencies over the complete ban.
Legislatures fear digital money could be used to finance illegal activities, with the finance minister saying that they should be banned from being used as a payment system.
A conglomerate including members from the central bank, the finance ministry and market regulator Securities and Exchange Board of India is expected to soon formulate a recommendation on what to do next, local reports say.
This comes a week after Iran made a similar move, but for different reasons, with Tehran citing concerns of money-laundering amid an economic crisis proceeding a potential return of sanctions due to the United States pulling from the nuclear deal.
An Iranian official announced on Saturday that the country has developed a local digital currency.
“The central bank’s [ban] does not mean the prohibition or restriction of the use of the digital currency in domestic development,” government minister Mohammad Javad Azari-Jahromi was quoted as saying by state news agency IRNA.
“Last week, at a joint meeting to review the progress of the [local cryptocurrency] project, it was announced that the experimental model was ready.”
India, considered the world’s largest democracy, has been challenged in court by crypto traders, who say that the ban is unconstitutional, and pushing digital money out of the official banks is counterproductive as it will be easier for fraud to occur.
Lawyers are advising crypto clients to hold onto their investments and take a “wait and see” approach to the current situation, with some trading moving to peer-to-peer networks or social media services such as the popular Telegram app.
“Unlike fiat currency, prices of virtual currencies are based on people’s beliefs and aspirations,” BuyUcoin’s Thakral told Reuters.
“The long-term vision for us and the people who are investing now is that cryptocurrencies are here to stay.”