Understanding India’s Cryptocurrency Crackdown

This month, the Reserve Bank of India (RBI), the country’s central bank, initiated a major crackdown on the purchase and trading of cryptocurrencies such as Bitcoin in India. At their bi-monthly monetary policy press conference on April 5th, RBI Deputy Governor B.P. Kanungo decreed that all RBI regulated bodies “are required to stop having business relationships with entities dealing with virtual currencies forthwith and unwind the existing relationships in a period of three months time.”

This means that come July, India’s banks and lenders will no longer be able to transact or facilitate transactions with companies or individuals that trade in cryptocurrencies.

The motive behind the move

In his speech, Mr. Kanungo briefly outlined the reasoning behind the directive that effectively shuts down crypto trade in India, contending that virtual currencies “can seriously undermine the AML [anti-money laundering] and FATF [Financial Action Task Force] framework, adversely impact market integrity and capital control, and if they grow beyond a critical size, can endanger financial stability as well.”

What’s Next For The Price Of Bitcoin?

Bitcoin was a bubble. My last prognosis at the beginning of November when Bitcoin (BTC) was at $7,000 was that I would get nervous at $30,000. But I got nervous at $17,500 and bailed. Market verticals are invitations to sell, and I’m glad I did. I am a contrarian value investor after all, not an insane momentum trader.

[Ed note: Investing in crypto coins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

The chart was a classic parabolic and anyone who has sat on a few will soon want to get off early. As an old-fashioned investor I can assure you it takes a lot of grim determination to let the profits pile up in this kind of surreal market. Fortunately, my will broke at a good moment.