On February 1st, 2018, risk aversion spread across the major cryptocurrencies after the media had misinterpreted an official statement released by India’s finance minister, Arun Jaitley. Initially, the market had been misled by a faulty interpretation and all major cryptocurrencies, especially Bitcoin, sold off impulsively, extending the already downside trend in play.
False alarm but questions remain
Even though the rumor of banning all the Indian exchanges proved to be wrong, as the later highlights showed, there are still worries, as the statement referred to the regulation of the cryptocurrency industry. As the finance minister, Arun Jaitley stated “Cryptocurrency is not a legal tender in the country” and he also stated that illegitimate activities involving cryptocurrencies should be stopped. This type of crypto trading news had contributed to this year selloff in cryptocurrencies. Most of the major coins are down by more than 50% from the last year high, showing that the market participants are afraid of regulation.
Many critics had suggested in the past that cryptocurrencies are a mean of money laundering and a very effective way to avoid taxation. As the industry developed due to massive inflows, governments across the globe started to think about the idea of developing a regulatory framework for cryptocurrencies that could ensure investors that this is a legitimate business like all the others.
However, crypto trading news involving regulation had been hurting the performance of cryptocurrencies and the buying appetite that had been seen in 2017 has completely vanished.
However, for the moment, all the bad rumors from India had been denied by all the major exchange platforms from the country. Coinsecure, Unocoin, and Zebpay had unanimously stated that the statement made by the finance minister had been misinterpreted. The finance ministery itself refuted the ban rumors.
Crypto trading news related to regulation is expected to take the center stage across 2018 as China and India are taking huge steps towards that direction. Because of that, the performance of cryptocurrencies might be affected. The industry of cryptocurrencies is still at the beginning and a lot of things will change over time. Even though the blockchain technology is truly a revolutionary idea that can change how we do business, it is still an idea that needs to be reshaped and the process will take time. The question that makes the investors risk-averse right now, is whether the regulation will contribute to the development of the industry, or will stop the growth.