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FUD! - RBI's Decision Sends Worldwide Crypto Markets into a Tizzy - What is the actual scenario like?

India's central bank, the Reserve Bank of India on 5th April, 2018 announced that all regulated entities such as banks will not be allowed to deal with cryptocurrencies (Virtual Currencies as they call them). Banks have been told to wind up all transactions with cryptocurrency exchanges within three months. Within minutes of this announcement, Bitcoin slumped 27%. Global markets attributed the fall in price to RBI's decision as India has a pretty large cryptocurrency investor market. However, RBI's decision is outdated and virtually has no effect on investors and exchanges.

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A few months ago, couple of banks like HDFC bank had voluntarily  withdrawn from dealing with cryptocurrency exchanges. I know this as a fact as when I started investing, I initially tried to deposit money on a cryptocurrency exchange using HDFC bank as I generally used their services, but due to them pulling out, I was forced to look at other options. This was around September, 2017.
During December/January, the IT departments froze accounts of cryptocurrency exchanges on 'suspicion of tax evasion and other malpractices'. All cryptocurrency exchanges require users to complete KYC (Know Your Customer) and any investor was required to submit PAN details for taxation purposes and other documents such as Aadhaar to prove their identity. This has been done for a while in view of scrutiny that they may be put under and they were right about it.
The IT department sought information of all investors trading on these platforms and it was submitted to them duly. Cryptocurrency exchanges completely cooperated with the IT department. However, banks saw this (IT department's move) as a negative one and decided to stop transactions with cryptocurrency exchanges during that time in early January. While crypto trading companies banned withdrawals and deposits (of INR, not cryptocurrencies) for almost 1-2 months due to this issue, they solved the problem by introducing payment gateways as the only option for depositing money.
Previously, money could be deposited either by a bank transfer or using the payment gateway that levied a 2% charge. Due to banks withdrawing support, payment gateways were the only way of depositing money now. Recently, Koinex, an exchange that I currently use has allowed their investors to deposit money almost instantly and for free using UPI. Apps such as BHIM or Paytm, that are linked to your registered bank account can be used to transfer money easily.

Cryptocurrency exchanges do not rely directly on banks at all. They have not relied on them for a while. RBI's decision has no impact on investors or trading companies. In the recently concluded G20 summit, it was decided that the regulation/ban on cryptocurrencies is not required. The RBI has only implemented this rule to create chaos and shatter the market. In cryptocurrency terminology this has resulted in FUD - Fear, Uncertainty and Doubt. On many Indian crypto channels that I follow, companies as well as individuals are thinking about filing a PIL, challenging this decision. The Government says that cryptocurrencies' block chain technology is great and will be used. However, their measures are creating panic and destroying the GLOBAL crypto market. Saying that block chain is excellent, but cryptocurrencies are terrible is like saying that car engines have great functionality to transport people but cars are completely stupid. Dear RBI, we recognise that you are being pushed by a committee constituted by the FM of India to make a statement regarding the future of cryptocurrencies. However, please do clarify what the repercussions of the same are. Most mainstream media outlets that a majority of the 1.2 Billion people read carry articles saying that this is the "end of Bitcoin" or "Bitcoin is essentially dead in India!". Fake News. Dear RBI, we recommend that you inform the cryptocurrency committee that asked you to make this decision that investors may have been fooled in the beginning, but are not fooled any longer. It is time that you make it clear what type of tax we pay, whether we are subject to LTCG, STCG or speculative trading taxes and make it clearer for investors to file taxes. Companies like Zebpay, an Indian exchange have their headquarters in Singapore for obvious reasons. Many companies, in other fields as well shift their companies to countries like Singapore for obvious reasons such as lack of clarity and chaos created by Government bodies. To prevent other cryptocurrency exchanges from shifting as well, play safe :)

Cryptocurrency investors are going to continue to HODL!

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