Prices of top cryptocurrencies, including Bitcoin, Ethereum, USDT, Shiba Inu, Dogecoin and Sandbox, crashed on Indian crypto exchanges on Wednesday as investors panicked after the government moved a Bill seeking to prohibit private cryptocurrencies while allowing certain exceptions to promote the underlying technology.
The cryptocurrencies were trading 15-20 per cent lower in the morning hours after which crypto exchanges rushed to calm investor frenzy over social media, asking them to hold on to their assets until the details of the proposed law become public. As of 5:25 pm, on Wednesday, while a few cryptocurrencies recovered, several top tokens continued to trade in red. Bitcoin’s price was still down by 8.3 per cent, Tether or USDT’s was trading lower by 8.77 per cent, Shiba Inu plunged 14.85 per cent and Ethereum was down by 5.4 per cent, according to data on WazirX.
Also read: Government moves to ban all private cryptos
But crypto exchanges said the proposed Bill may not ban cryptocurrencies altogether. Nischal Shetty, Founder, WazirX told BusinessLine , “While the description of the draft Bill appears to be the same as in January 2021, several noteworthy events have occurred since January. The understanding and knowledge around crypto today is far greater than it was until a few months ago. This is what gives me the hope that we’ll soon be able to classify crypto into currency, asset, utility or security. As an industry, we’re in sync with the fact that INR is the only legal tender in India, and crypto being an asset/utility which people buy and sell.”
Ashish Singhal, Founder and CEO, CoinSwitch Kuber, said investors should calm down and take investment decisions without relying on secondary source of information. “Our discussions with stakeholders over the last few weeks indicate that there is a broad agreement on ensuring users are protected, financial system stability is reinforced and India is able to take advantage of the crypto technology revolution.”
According to an industry source, the proposed law may bring in investment caps to protect small investors. Another source said that existing investors will be given time to exit if there was a ban. The government did not shed any light on the provisions of the Bill which added to investor confusion, leading many to sell at a loss. “I had invested ₹5,000 last year which had grown to ₹16,000 but I sold it today after I read about the proposed Bill,” said Sumit Manikchand from Mumbai.
Others like 26-year-old retail investor Viraj Sheth, Co-founder and CEO Monk Entertainment, bought more. “People start selling when prices start dropping by 15-17 per cent, thinking it would tank further. But it has already started recovering. It’s up by 7 per cent or more. I have actually bought more Ethereum, Bitcoin and Matic in the morning today. I am okay to hold it for 10 years. And just in case its value goes down to zero tomorrow, it is still okay as it is only 20 per cent of my wealth. My bet truly is on the exponential return it will possibly give me if it does not go down to zero,” Sheth told BusinessLine .