As India becomes the latest country to consider a ban on cryptocurrency, a battle looms.
INDIA has become the latest country to propose tougher regulations on digital currencies, despite warnings that such measures are at odds with global trends.
Following proposals for a broad ban on private cryptocurrencies, bitcoin prices in India have plummeted by around 10%, with a smaller drop globally.
This week, the International Monetary Fund (IMF) issued new criticisms of the token.
In response to reports that El Salvador planned to fund the construction of a Bitcoin city with the cryptocurrency, the IMF warned that it should “not be used as legal tender” due to its “high volatility” and potential for financial instability.
El Salvador has been a leader in the adoption of Bitcoin as legal tender.
“If there was ever any doubt that the IMF was not a fan of Bitcoin, that can now be dismissed as this rhetoric clearly shows how they view the digital asset and are in no way pleased to see countries adopt it,” Marcus Sotiriou, a sales trader at digital asset broker GlobalBlock, said.
He did warn, however, that “with the overall digital asset market now valued at near (dollar)3 trillion and demand for the asset class worldwide continuing to increase,” there was little the IMF could do.
Freddie Williams, another GlobalBlock Sales Trader, was also skeptical about the impact of the changes in India.
“This is not the first time a country has proposed a bill to ban cryptocurrencies, and it certainly won’t be the last,” Mr Williams said.
“We’ve seen this with China on multiple occasions, and the space has continued to grow with mounting institutional interest becoming increasingly prominent in the space.”
Even if countries’ rejection of cryptocurrencies has little effect on the currencies themselves, there are warnings that the bans may come back to haunt those who enacted them.
Speaking to This website, Clem Chambers, CEO of investment site ADVFN, warned that countries like China and India risk being left behind if they do not embrace cryptocurrencies.
Mr Chambers compared the situation to France’s skepticism of the industrial revolution, explaining that “people in government tend to look down their noses at new technology,” and that cryptocurrency had become the “rock and roll” of younger generations.
Countries “would eventually start to get it,” he predicted, referring to cryptocurrencies’ ability to generate capital, with (dollar)2.5 trillion (£1.87 trillion) in value created “out of nothing.”
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