India is a mammoth market for cryptocurrency, once responsible for 10 percent of all Bitcoin transactions, but the country’s central bank banned financial institutions from processing the orders of cryptocurrency exchanges on the 4th of April 2018.
The move does not seem to have harmed the industry so far – trade volumes and prices have surged in the month since the decision, according to a report in Reuters. This can be explained by the three-month window that the Reserve Bank of India has given to businesses to comply with its ruling; people are rushing to take advantage of their last chance to profit.
The ban was the result of the committees set up by the government to decide on the future of cryptocurrency in the country. The decision was not surprising; the country’s finance minister, Arun Jaitley, made it clear in February that cryptocurrency is not considered legal tender in India, at one point even comparing it to a Ponzi scheme. Cryptocurrency exchanges have also been raided by the tax authority.
At the time of the decision, the Indian cryptocurrency market was estimated at more than 5 million investors, transacting 2-3 billion INR daily at the country’s 12 operational cryptocurrency exchanges. One petition against the decision gathered 22,000 signatures in only five days.
Since the decision, the price of Bitcoin in India has risen from 350,001 INR ($5,237) to 618,000 rupees ($9,270).
Shivam Thakral, CEO of cryptocurrency exchange BuyUcoin, said: “There is a positive sentiment in the industry that the government will not ban trading in cryptocurrencies, and even if formal banking channels cannot be used, people can move to crypto-crypto trading platforms. New investors are coming to our exchanges while existing ones are regaining interest after the drop because they’re getting good value and are making money as the prices of cryptocurrencies move higher.”
Despite the ban, there exists cautious optimism in the Indian cryptocurrency community. Unlike China where the public has little recourse against the government’s decisions against cryptocurrency, India is a democracy – court action against the government’s decision has been initiated.
Anirudh Rastogi, managing partner at a law firm that represents several Indian cryptocurrency exchanges, told Quartz: “It has come with this overarching order that can be challenged on several counts. There is a right to trade, and it cannot be restricted in absolute terms. Only reasonable restrictions can be imposed and applied but a complete prohibition as restrictive as this was unnecessary.”