The year of cryptocurrency rout2 min read . Updated: 23 Dec 2018, 10:12 AM IST
In 2018, major cryptocurrency exchanges shut shop. For instance, Zebpay, one of the largest cryptocurrency exchanges in India, closed its business in September
Mumbai: In 2018, ‘how to invest in bitcoins’ was one of the most searched questions in India although you can’t buy or sell bitcoins using a bank account.
The bitcoin exchanges have been fighting the case against the Reserve Bank of India (RBI) after the regulator banned use of banking channels to transact in cryptocurrency.
Along with the crash in bitcoin price, it was a negative year for cryptocurrency in India.
“The year has been negative for cryptocurrency. The government was supposed to come out with rules and regulations which they still haven’t done. However, the fact that they had issued an RBI circular almost banning it in India by not allowing banks to do cryptocurrency transaction, hasn’t been good for India. The case started in June 2018. We don’t know what is going to happen. Some companies have shut shop or gone out of India," said Rashmi Deshpande, associate partner at Khaitan & Co., a law firm.
The next date for the hearing of the case is January 15.
In 2018, major cryptocurrency exchanges shut shop. For instance, Zebpay, one of the largest cryptocurrency exchanges in India, closed its business in September. Coinsecure shut business due to internal fraud and the founder is now looking to start business out of India.
In the past year, multiple agencies have scrutinised cryptocurrency companies.
First, the Income Tax (I-T) department surveyed bitcoin exchanges to determine taxation on bitcoin investments.
Following this, the enforcement directorate conducted a probe to check for violation of the Foreign Exchange Management Act (FEMA).
Meanwhile, regulators, including the RBI, the Securities and Exchange Board of India (Sebi) and the ministry of information technology came together to form a regulation on cryptocurrencies, which still doesn’t exist.
Meanwhile, the cryptocurrency prices also declined. For instance, bitcoin was at $14,112 in January 2018. As of December 14, it was around $3,319, according to data from coinmarketcap.com, a platform that tracks cryptocurrency prices.
What you should do
According to experts, it is going to be a tough year ahead for the industry. “For the next one-two years, there is very little hope. We need to also see how the regulation will be worded. It is a long wait and an expensive affair," said Deshpande.
Exchanges who are still in business are adopting a wait-and-watch approach.
“We will wait for the verdict and then take a call. Right now the business is low but we haven’t decided the way forward," said Sathvik Vishwanath, chief executive officer and co-founder, Unocoin, a bitcoin exchange platform.
Considering the uncertainty around cryptocurrency, it would be advisable to stay away from it.
If you still want to invest it would be important to understand the regulatory changes before venturing into it.