A Cryptocurrency specialist in India has warned that the country’s crypto market might fail to realize its full potential because of strict government regulations. He explained that people who trade in this market were currently experiencing difficulties or totally unable to convert Cryptocurrencies into FIAT money because of existing regulations.
In his analysis, Dr. Lankhapal, a frequent trader with vast experience in this field says that there was a period when the government allowed financial institutions to freely provide these services and the industry boomed. One such period is January this year where you could easily walk into a bank and trade your digital currency for fiat money through MTCX (Money Trade Coin Exchange); a trade that earned people millions in profits.
Communication From Institutions
As it is now, they have received letters from these financial institutions terming the trade illegal. This has consequently made it impossible to make withdrawals and as such, the trade has stopped. He further stated that the regulation has resulted in several shortcomings in the industry because they have been forced to shift to other unfavorable trading platforms that the prices are set on the basis of buyer-seller agreement.
In its communication dated 6th of April this year, the Reserve Bank of India affirmed that they had on several occasions, using its public notices dated 24th December, 2013, 1st February, 2017 and 5th December, 2017, warned users and especially those who owned and traded in virtual coins such as Bitcoin against the various economic risks associated with dealing in virtual currencies.
Putting the risks into consideration, the Bank reached a conclusion that all financial institutions operating under it were not allowed to deal in virtual currencies and or provide such similar services to any companies or individuals who equally dealt in such.
The list of banned services includes:
• Maintaining any type of account with these banks
• Registration in these banks
• Any trading activities associated with virtual coins
• Clearing of cheques related to these trades
• Giving of loans with virtual coins as collateral.
• Receiving of money into the accounts that result from the sale of these virtual coins.
Triumphing Over The Conditions
Dr. Lankhapal affirmed that the notification from Reserve Bank of India (RBI) is no doubt the reason behind these rough times they are currently facing in the market. He, however, noted that amid this crisis, they have managed to overcome the damage that they experienced when their coins were hacked and ensured their clients were not affected by the ordeal.
To counter this adversity, Dr. Lankhapal stated that his company; Flinstone Technologies Pvt. Ltd has taken a Standby Letter of Credit (SBLC), which he explains as a permanent commitment to writing that is different from the sale contract the banks used to issue.
This will hopefully restore the trust clients initially had. The SBLC will additionally ensure that MTC is listed in the exchange trading platforms. It will also ensure the listing price is set at a base rate of 3 USD. As such, prices will be determined through market forces of demand and supply.