Crypto Investing
24 Nov 2021

FAQ’s On Cryptocurrency Regulations

Akumbenla Jamir

November 23rd, 2021, saw a crash in cryptocurrency markets following news that the Government of India plans to introduce a Bill in the Parliament to prohibit all private cryptocurrencies in India, except a few.

The ambiguity of this news has caused widespread panic and saw around a 15% crash in the overall crypto market, with Bitcoin down over 17%, ETH by 15%, and Tether down by almost 18%.

As cryptocurrency investors and traders, we understand that you may have many crucial questions about the situation and how to tackle this. In an attempt to ease your mind and provide some clarity on the present and the probable future, we’ve answered some frequently asked questions.

1. Is the government banning cryptocurrency?

As of now, the government has not given any official statement of a possible ban.
The Indian crypto industry is actively engaging with the government and regulators to formulate a progressive regulatory framework for cryptocurrencies. We would urge you to wait for a government statement on this matter and not rely on any other source of information.

2. If the government bans cryptocurrencies, does that mean our invested money is wasted?

In light of recent discussions between the government and BACC (Blockchain and Crypto Assets Council), we are positive that the government does not aim to ban cryptocurrency.
Stating that India cannot afford to ignore cryptocurrencies altogether, Finance Minister Nirmala Sitharaman said,
“We have to be sure that a futuristic thing can’t be shut out.”
However should a scenario of ban arise, we are confident that the government will take measures to safeguard investor interests. We assure you that your funds will be safe and secure with us.

3. Should I sell my investments?

We recommend that investors not make any hasty decisions. We urge you to do your own research, and focus on market movements rather than misinformation while making investment decisions. The government has involved all relevant stakeholders in the process of regulation without overlooking the interests of stakeholders. CoinSwitch Kuber will adhere to all regulations set forth by the government and ensure that investors’ funds are safe throughout.

4. How secure is my money?

Funds transferred into the CoinSwitch Kuber app and held in any form, fiat or crypto, are safe with us. As a legal entity running a crypto trading business in India, we are bound by the laws of this land. We adhere to all the legal requirements, including KYC and identity verification norms, and have also taken self-regulatory measures to ensure the safety of your funds with us.
From the security perspective, we have the best infrastructure and people in place to ensure your funds are free from any cyber threats.
CoinSwitch has been trusted by over 13 million users across India, with lakhs of trades executed each day safely and securely.

5. Is the news about the crypto ban accurate? How likely is it to be implemented?

The Indian crypto industry is actively engaging with the government and regulators to formulate a progressive regulatory framework for cryptocurrencies. We would urge you to wait for a government statement on this matter and not rely on any other source of information.

6. When will the bill become official?

As of now, there is no fixed timeline given by the government of India to pass the crypto bill in parliament. The earlier Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which was due in the winter session of the parliament of 2021, got pushed back due to legal complications and uncertainty on regulatory authority.

However, we expect that the bill to regulate trading and investing activities in cryptocurrencies in India will be introduced in the upcoming 2022 budget session of the parliament.

7. What regulations could the Indian government take on crypto? Will it be banned? If not, is regulating crypto a good move?

Given the limited information on the bill’s details, it would be prudent to refrain from guessing. However, as one of the key stakeholders in this crypto ecosystem, our discussions with various other stakeholders, within and outside government, have indicated that there is a broad agreement on:

  • Ensuring customers are protected,
  • Financial system stability is reinforced,
  • And that India should take advantage of the crypto technology revolution.

We are eager to welcome a positive regulation around cryptocurrencies as this could make it more trustworthy as an asset class, and help them gain more acceptance. However, it would be prudent to wait for the government to clarify this matter.

8. What is private cryptocurrency?

While many organizations may have their own definition of what ‘private cryptocurrencies’ mean, we request you to wait for the government to clarify it formally.

9. What should I do while there is widespread panic in the market?

We recommend that investors not make any hasty decisions. We urge you to do your own research, and focus on market movements rather than misinformation while making investment decisions.

10. Prices on CoinSwitch Kuber are dumping and pumping within seconds. Is this because the company is at a loss?

We sincerely apologize if you have been facing this issue. However, this has nothing to do with the company’s finances. CoinSwitch is the highest valued crypto company in India backed by global stalwarts like Coinbase, Sequoia, Andreessen Horowitz, Paradigm, Ribbit Capital, and Tiger Global.
As for the dips and pumps, people are selling off crypto assets in massive quantities as the speculative scenario regarding the government’s stance has been represented wrongly. However, people are also buying the dips, which is leading to the occasional pumping. It is simply an exchange-specific phenomenon driven by the buying-selling preferences of the concerned parties.

11. Why is there a huge difference between crypto coin prices in Indian exchanges and foreign exchanges?

The prices of cryptocurrencies, like Bitcoin, vary across exchanges. Since a currency like Bitcoin is decentralised, there is no standard or global BTC price across countries or even exchanges within the same country.
The price-determining factor of these coins is based on the principle of demand and supply. No exchange can control this. When the supply of Bitcoin is more than the demand for it, the prices tend to drop, and the coins are available at a discount. Due to the ongoing events around cryptocurrency in India, the demand has momentarily dropped. This in turn caused a price drop, while global exchanges remain unaffected. Hence, the price difference between Indian and Foreign exchanges.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Akumbenla Jamir

Content Writer

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