Bitcoin: ​Bitcoins lose lustre in the face of flak

ET Wealth

Bitcoin prices in India have fallen 48% in September and the cryptocurrency is now trading at Rs 2,29,417 per unit. The fall comes amid crticism of the unregulated currency from various quarters. A major Chinese bitcoin exchange, BTC China, last week said it will stop all trading activities by the end of this month as Chinese regulators have directed the country’s cryptocurrency trading platforms to close down by end-September.

BTC China will immediately stop accepting new account registrations, said Bobby Lee, CEO. China accounts for 23% of all bitcoin trade and the move by the Chinese regulators is being seen as the major reason for the 27% fall in bitcoin’s value in the past 10 days. The Reserve Bank of India (RBI) has also been cautioning people against bitcoin trading though, unlike China, it hasn’t asked trading platforms to close operations.

Speaking at the India Fintech Day conference last week, Sudarshan Sen, Executive Director, Reserve Bank of India, said: “As regards non-fiat cryptocurrencies, I think we are not comfortable.” Non-fiat currency refers to currency that is not regulated by a central bank. The RBI’s stance has been criticised by the Indian bitcoin trading platforms. They argue that the opposition to the digital currency is largely due to its novelty. “Any history textbook will reveal how any disruptive and radical transformations were written off, in the beginning, only to become a part of our lives eventually. The criticism of Bitcoin is in line with the same inertia that resists change,” said Hesham Rehman, Co-Founder and CEO, Bitxoxo.

Trading platforms have been demanding that the government come out with a clear policy on bitcoin trading and their regulation. “Government has set up a committee to prepare a framework and guidelines on to how regulate bitcoins. Exchanges are waiting for the outcome of this committee’s report,” said Sandeep Goenka, Co- Founder and COO, Zebpay.

Bitcoin trading has also faced serious flak by investment advisers and financial services executives. “It won’t end well. Someone is going to get killed,” said Jamie Dimon, CEO, JP Morgan. He also labelled the cryptocurrency a ‘fraud’ and said he would fire any person in his company found trading in bitcoins. “It’s against our rules and they (bitcoins) are stupid,” he said.

Though the RBI has cautioned against bitcoin trading, the central bank is open to the idea of introducing its own digital currency. “Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely,” said Sen. But till such time as the government comes out with a regulatory framework cryptocurrency enthusiasts would do well to heed the RBI’s advice: “Any user, holder, investor or trader dealing with virtual currencies is doing it at their own risk.”