The recent announcement by the Reserve Bank of India on cryptocurrency has not only left the market in panic but the investors are in a state of loss with many planning to wrap up their operations. After this move, the exchanges witnessed a decline in their daily trade volumes and the price fell for all tokens. Those investors who have already made hefty investments for the long term through crypto assets will suffer huge losses. There are many who believe that the announcement is a letdown for new investors but will not have much effect on the cryptocurrency transactions in the long run.
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Reserve Bank of India announced that regulated entities who were already providing services to business or individuals dealing in digital currency have been given a period of three months to exit the relationship. Deputy Governor of RBI, B.P.Kanungo mentioned that the RBI has cautioned the members of the public on atleast three occasions about the risks associated with cryptocurrency. This decision is in order to fence the RBI regulated entities from the risks associated with dealing in virtual currencies. These entities need to stop having a business relationship with those dealing in virtual currencies within three months. After this announcement, the entire mood in the market is dismal.
Belfrics ended its cyptocurrency exchange operations in the country when the banks shut down its accounts. It is headquartered in Malaysia and its exchange is active in Dubai, Bahrain, China, Kenya, Indonesia, Singapore and Malaysia, Hong Kong and Indonesia. The move by the RBI has impacted the industry in a negative manner; there is a dismal mood in the exchange. However, the directive has also given a time frame to settle the pending transactions with the exchanges. This time could be used by the traders to wisely transact on their crypto assets.
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This decision could let traders to do under the table dealings or make cash transactions which cannot be regulated. So even if it does not harm the existing market, it could lead to illicit practices and an emergence of a black market. Traders are expecting that the government will provide detailed information by the end of June.