InvestorQ : What will happen if Cryptocurrency gets banned?
Dia Deshpande made post

What will happen if Cryptocurrency gets banned?

Aswini Chikkodi answered.
2 years ago
The government on Nov 23, 2021, announced the Cryptocurrency and Regulation of Official Digital Currency that seeks to “prohibit all private cryptocurrencies” in India. However, the circular has cited some exceptions to promote the underlying technology used in cryptocurrencies and its uses in various Indian sectors such as supply chain and logistics.

Along with a likely ban on all private cryptocurrencies, the circular also seeks to put a framework in place for the Reserve Bank of India to create a digital version of the Indian rupee called Central Bank Digital Currency (CBDC).

In response to the announcement to bring the bill in the winter session, the Indian crypto market saw a major sell-off as crypto investors looked towards cutting their losses. In the last 24 hours, Bitcoin crashed 24% while Ethereum was down 23%. However, the sudden sell-off was followed by some stabilization as optimistic investors bought more cryptocurrencies, hoping that the government would not go through with a complete ban.

If the bill is passed and private cryptocurrencies are banned, the crypto prices will inevitably crash further due to panic selling and the fact that Indians are the largest crypto holders worldwide.

The Indian stock market seems to be unaffected by the crypto market condition. The latter is an unregulated asset class that doesn’t include any of the factors that affect the demand and supply equilibrium responsible for stock market volatility. However, it is expected that if cryptocurrencies are banned, the stock market can witness high volume investments.