The Maya Of Bitcoin

Regulators hate it, investors love it. The great tussle to find the middle ground for cryptocurrencies...

- Rajeev Dubey

The rumblings from the Reserve Bank of India (RBI) are ominous. The banking regulator has issued four warnings against Bitcoin (BTC) and other crypto-currencies since December 2013, the last few explicitly calling it a ponzi scheme. Stock market regulator Securities and Exchange Board of India (SEBI) has made an oblique cautionary statement on the digital currency. And, after years of stony silence by the finance ministry, Arun Jaitley made a surprise declaration in Budget 2018: “…Bitcoins will not be considered lawful or legal tender in India.”

You would expect a nationwide clampdown after such overpowering sentiment from the regulators and the government.

Far from it.

Two dozen Bitcoin/crypto trading platforms (8 large ones) are flourishing where you can buy and sell Bitcoins like you buy and sell stocks on any stock exchange. While regulation is still years behind the curve, 2-3 million investors trade between ₹100 to 200 crore worth of crypto-currencies a day (₹36,500 crore to ₹73,000 crore a year). That's $6-12 billion in annual trading. After all, cryptos are traded 24x7, 365 days a year. Yet, crypto trading in India is minuscule compared to the daily global trade of $4-6 billion.

At the same time, unsuspected millions are being duped by fake cryptos across the country with false promises of mind-boggling returns.

Therein lies the dilemma, the debate and the lazy disposition of regulators.

Bitcoin presents one of the trickiest regulatory challenges in recent times. Investors and millennials love it. Regulators hate it. And governments remain wary of its avatar as a currency as it challenges the might of the sovereign itself. This is clearly a historic tussle between the principles of free market and the universal expectation of regulatory oversight.