India has big plans for crypto and it involves less of it - The Average Joe

    India has big plans for crypto and it involves less of it

    Victor Lei — Head of Research

    November 25, 2021

    bitcoin

    November 25, 2021

    India, the world’s second-largest population, plans to introduce a bill banning all private cryptocurrencies aside from “certain exceptions”.

    What’s the big deal? The world is split on cryptocurrency regulations — but many are starting to choose sides. India flip-flopped between banning crypto in 2018 to backtracking on the decision in 2020.

    The redrafted bill shows more openness to crypto, proposing to:

    • Treat crypto as a financial asset — banning its use as legal tender for payments.
    • Ban crypto ads and solicitation from crypto firms.

    The draft leaves many questions — but according to India Today, crypto trading is likely to continue under the new rules — restricting trading to specific exchanges and restricting who can create new cryptos.

    India has plans to introduce its own central bank digital currency — expecting to present an outline of its proposal to parliament on Nov. 29.

    Regulation spectrum: In 2021, China’s ban on crypto sent the crypto market down over 50% during the summer but India’s proposed regulations haven’t hit as hard. And other countries are taking different stances.

    • The US is regulating certain parts of the crypto market differently — approving Bitcoin ETFs in 2021 but taking a cautious stance on stable coins.
    • El Salvador made crypto an official currency, with Germany and Switzerland among the most crypto-friendly countries.

    Research firm, Kalkine Group’s CEO expects India’s move to pressure other G20 countries to clarify their stance on crypto — which could lead to even more volatile moves to come.

    Investors: The recent crypto moves show us two things…

    • Correlation: Crypto is moving in a similar direction as other risky stocks, and according to Ava Trade, the correlation between the S&P 500 and Bitcoin increased to 0.33.
    • Resilience: Despite China’s ban, the crypto market recovered to new highs within months — showing the resiliency of the young asset.

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