Bitcoin value plunges after misleading report that India would ban trading completely

Other countries have issued similar threats in the past – but India appears intent only on stopping criminal activity

Andrew Griffin
Friday 02 February 2018 16:40
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Bitcoin is plunging in part because of a report that India could ban trading in cryptocurrencies entirely.

The report appears to have been misleading. The Indian government appeared to have been only announcing that it could add extra regulation to bitcoin – but in an ambiguous statement that hasn't stopped it dragging the value of cryptocurrencies down.

A whole host of fears have led the price of cryptocurrencies across the market to plunge. But among them was worries that Indian could ban trading entirely – a decision that would immediately cut off a huge market and inevitably lead to a drop in the value of cryptocurrency.

The worries began with reports of a speech by finance minister Arun Jaitley, which did criticise the use of cryptocurrencies. Indian lawmakers have sometimes attempted to institute formal regulation for bitcoin, while at other times arguing that its use at the moment is illegal and suggesting it could be subject to a crackdown.

“The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these cryptoassets in financing illegitimate activities or as part of the payment system,” Mr Jaitley told parliament in his annual budget speech.

The ambiguous statement was reported in a range of media as a suggestion that India could ban the use of cryptocurrencies because they were illegal. But it seems that in fact Mr Jaitley was only suggesting the country would look to ban the use of cryptocurrency for illegal activity, at least according to major digital currency companies in india.

India will however look to use blockchain technology – which underlies cryptocurrency – as part of the government, said Mr Jaitley.

Mr Jaitley is far from the only world leader to have suggested such a crackdown. Leaders from the UK prime minister to Donald Trump's most senior financial policymaker have suggested that they could pursue new regulation, which they claim is an attempt to stop digital currencies being used to finance and allow illegal behaviour.

New regulations are expected to arrive after the G20 meeting in March, when many of the world's most powerful finance ministers meet. France, Germany and other countries have suggested they'll bring new proposals to that discussion, and attempt to institute them at an international level.

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