War on bitcoin? Govt panel seeks crackdown on cryptocurrency dealers in India

NEW DELHI: To curb the use of cryptocurrencies in India, a government panel is said to have advised closing cryptocurrency dealers in India, ETNow reported on Thursday quoting agencies.

The decision has come at a time when cryptocurrency bitcoin has gained more currency, with US-based derivatives marketplace operator CME Group planning to offer bitcoin futures later this year. Market watchers called it a notable announcement that can open new doors for the world's yield-hungry institutional investors.

The largest cryptocurrency traded at a record high of $6,938 on Thursday.

Cryptocurrencies are digital currencies that use rules of cryptography for regulation and generation of currency units.

Bitcoin is one of the oldest and most famous cryptocurrency in circulation around the world.

Trading of virtual currencies has increased globally and have given extraordinary returns. At present, Bitcoin is hovering around Rs 4.90 lakh mark in India against Rs 1.79 lakh where it had three months back on August 2, 2017.

Market experts believe banning cryptocurrency dealers or exchanges would not work.

Instead of closing cryptocurrency dealers, the government should take steps to curb buying and selling of bitcoins or cryptocurrencies in cash. This move can reduce illegalities in the country, says Hesham Rehman, CEO & Co-founder, Bitxoxo, a bitcoin exchange operating in India.

If exchanges come under the definition of dealers, then in case of closure of domestic cryptocurrency exchanges, buyers will start buying them from foreign exchanges, he said.

Rehman said providing suitable guidelines to bitcoin exchanges could help exchanges and buyers of the currency. Exchanges had earlier requested the government to penalise individuals who are trading in it using cash.

According to reports, the aggregate value of all cryptocurrencies hit a record high of around $184 billion on November 1, according to industry website Coinmarketcap, making their reported market value worth around the same as that of Goldman Sachs and Morgan Stanley combined.

Lower return given by other asset classes including real estate and gold is one of the other reasons that helped increasing volumes of cryptocurrencies in the recent past.