As China cracks down on bitcoin, Indian cryptocurrency exchanges wait and watch

Fate hangs in balance.
Fate hangs in balance.
Image: Reuters/Benoit Tessier
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The Indian government does not like bitcoin, but unlike its Chinese counterpart, it is in no hurry to clamp down heavily on virtual currencies.

Once home to the world’s largest community of bitcoin traders, China is now reportedly considering blocking access to local and offshore platforms that provide centralised trading in virtual currencies. Earlier, it had banned initial coin offerings and had also asked local exchanges to stop trading. While there’s no blanket ban on cryptocurrencies, China’s been exploring ways to curtail their trade as it believes they pose a financial risk

India, too, is uncomfortable with these digital assets and has repeatedly raised red flags. The finance ministry recently even called them a ponzi scheme, sparking fears of a ban, like those imposed by Bangladesh and Indonesia. A few exchanges had even faced trouble from banks.

The Indian bitcoin community, meanwhile, is desperate for some clarity.

Waiting and wishing

Virtual exchanges believe if the government had to ban them, it would have already. “I don’t think there will be a knee-jerk reaction from what is happening in other Asian countries. However, at this point we are all just hazarding a guess,” said Sathvik Vishwanath, co-founder and CEO of Unocoin, a cryptocurrency exchange.

A few think authorities may emulate those in other developed nations, instead of China.

“It (the government) can look at other areas like the United Kingdom, which haven’t cracked down on these exchanges,” Shubam Yadav, co-founder of Coindelta, another exchange, told Quartz.

On its part, India’s central bank has set up a panel to figure out the legal implications of digital coins and how they can be regulated.

“Right now the government is taking informal steps to ensure it does not become too big to fail, limiting the regulatory choices available to them,” said Anirudh Rastogi, managing partner at law firm TRA. “However, I do not expect an impulsive reaction. My guess is that they will come out with more balanced reaction.”

But till the government makes up its mind, the Indian bitcoin community will remain on tenterhooks.