Is India ‘Ban’ Bill a Crypto Investment Opportunity?

Moves to outlaw private cryptocurrencies in India are being seen as a crypto investment opportunity by some.

Maybe it was just one of those overdue ‘gut check’ moments that newer markets sometimes need to experience on their course of evolution towards maturity. After enjoying a sensational run, cryptocurrencies in India were rocked this week by the news that the government will introduce a Bill in the Parliament that could ‘outlaw’ all private cryptocurrencies.

Jitters Among Crypto Investors

Granted, the government of the country with a population of 1.4 billion said it would make certain exceptions to ‘promote the underlying technology of cryptocurrency and its uses’.

The news caused jitters among newer crypto investors.

September and October brought a lot of newcomers to the digital assets market and this kind of development has produced knee-jerk reactions from investors in the past. This is particularly the case with new (as in skittish) crypto investors who are likely to jump the crypto-ship at the first sign of danger.

Not only have digital coins like Ethereum and Bitcoin enjoyed a ride to new heights in value recently because of the recent influx of funds, but a new kind of digital asset, non-fungible tokens (NFTs), even found a home in the headlines for their skyrocketing values and enigmatic characteristics.

Meme Coins Lose Value

A closer look at India, and the posted bulletin, reveals that the ban is a component of the proposed Cryptocurrency and Regulation of Official Digital Currency Bill slated for introduction at the coming winter session. The legislation is purported to achieve the creation of ‘…a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI)’.

Yesterday morning, according to Bloomberg, the mega-popular coins Shiba Inu and Dogecoin had lost considerable value – more than 20% on the WazirX crypto exchange in India. The damage seemed to be relatively contained to India as values of the same coins on popular exchanges remained largely unchanged.

What’s most compelling about news like the proposed ban is the opportunity it creates for arbitrage; activities where the savvy investors jump into action to pick up a few assets for a bargain price with the intention of profiting elsewhere, usually another exchange.

WazirX Experiences Trading Delays

A report from CoinDesk sheds a bit of light on the phenomenon, but the shell game of buying and transferring funds to a different exchange after purchasing assets at a lower cost is much harder than it sounds.

Still, the attempts were being made and the WazirX had to send out a tweet that it was experiencing trading delays in their app after exchange users were voicing frustration that they could not move their crypto. Arbitrage opportunities in the crypto-market have long been one of the primary targets of regulatory efforts.

The good news is that 2021 will go down as a big year for cryptocurrency. It was the year that key players on Wall Street built up enough confidence to make substantial investments in the digital assets and mainstream adoption now seems achievable. Whether India’s proposed ban will have any long-term consequences is yet to be determined.