India had been at the center of attention since April 2018, when the Reserve Bank of India (aka the central bank) shocked the cryptocurrency market by blacklisting all exchange platforms from financial institutions.
The ban that started on July 5th left all exchange operators with no liquidity and forced other investors to move their activity outside of the country. As we have seen recently, an Indian cryptocurrency fund had been launched in the United States, confirming that uncertainty weighs on the investors’ sentiment.
What could happen next?
Even though there had been a rough period for cryptocurrencies, the government works on a series of measures in order to regulate the industry. According to the statement, from Quartz India, there seems to be an interest for a regulatory framework specially designed for the blockchain technology and not for cryptocurrencies, also. As a government official told:
“Blockchain is an interesting thing. We definitely want to milk it effectively for financial transactions. So, all officials are really trying hard to understand how to separately use blockchain, without cryptocurrency…And understanding a new software takes time.”
That’s not a good news for cryptocurrencies. Also, there’s no clear schedule in terms of where some measures might actually be adopted. The ministry of finance, which is currently operating under the department of economic affairs, should have been published a proposal for crypto regulation last month. However, that had not happened thus far and no one knows for how long it will be postponed.
All hopes are now pointing towards the last quarter of the year and sources familiar with the internal ministry having been stating that cryptocurrency regulation should be ready until the end of 2018.
Could regulation in India be a game changer?
Probably not. But as we move forward and big countries start to implement regulatory measure for cryptocurrencies that could ease the current bearish trend we see in the market. Big markets like Japan, South Korea, and the United States are also expected to come with healthy measures. However, the procedures seem to take longer than anticipated, postponing the outcome and keeping the bullish sentiment at low levels.
Institutional investors are expected to remain on the sidelines until some actual measures will be implemented and that means bad news for the price performance of cryptocurrencies. We maintain our short-term bearish view since no significant technical or fundamental shift took place in the market recently.
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