A major example of the impact of regulation on crypto trading in India is the infamous GainBitcoin scam. In 2018, this Ponzi scheme was exposed. In the scheme, thousands of investors were duped into investing in a fake crypto trading platform. The scam was offering unrealistically high returns that attracted many of the general people of the country. It swindled investors of approximately ₹2,000 crore.
The lack of regulatory oversight allowed the fraudsters to operate freely. That created the consciousness of the dire need for stringent regulations in the crypto sector. Another example is the introduction of the proposed Crypto and Regulation of Official Digital Currency Bill 2021. This bill suggested a ban on all private cryptos while allowing for the creation of an official digital currency by the RBI. It basically created a wave of panic among crypto traders in India. The uncertainty surrounding the bill led to a massive sell-off.
By this event, Bitcoin prices in India dropped significantly compared to global prices. That impact was very crucial and significant. Although the bill hasn’t been passed yet, the mere possibility of such stringent regulation shows how government decisions can drastically impact the crypto market. When we see regulation as a hindrance, it can also encourage innovation in the crypto world. It can provide clear guidelines. The govt. can foster a more transparent and secure environment for crypto businesses in the country. This kind of decision will attract more investors. This will be a positive side for the development of new and innovative financial products.
~ Regards,
VEIGO (Community Mod)
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