Indian government may ban trading in cryptocurrencies soon. In fact, the inter-ministerial committee constituted to give its view on cryptocurrencies has recommended that the government should put a ban on such currencies. It also proposed to introduce a formal digital currency, which will be regulated by the RBI.
Cryptocurrency like Bitcoin is digital money, which is not regulated by any sovereign authority. The price movement of cryptocurrency depends on demand and supply and it has nothing to do with fundamentals.
Cryptocurrencies have gained popularity in very short span of time in India. In fact, a few media reports claim that around 70 lakh Indians hold cryptocurrencies of more than USD 1 billion. The proposed regulations will impose hefty fines on those holding such currencies beyond the transition period .
Cafemutual spoke to a few MFDs to know their views on cryptocurrencies and the anticipated impact of the proposed ban.
Mumbai RIA Suresh Sadagopan of Ladder7 Financial Advisories said that cryptocurrencies are volatile and surrounded by many unknowns. “Investors holding such securities may wait for the legislation before taking any hasty decision.”
Sadagopan believes that investors should avoid investing in fads like bitcoin and stick to investment options backed by fundamentals.
Bangalore MFD Srikanth Matrubai of Goodfundsadvisor believes that existing investors should use the transition period to exit their holdings in a phased manner. He said, “Investors who are interested in such currencies should wait for the government backed digital currency, which will be regulated by RBI.”
