India’s cryptocurrency exchanges reportedly saw a spike in trading volumes this week, about a month after the country’s central bank banned banks from dealing with cryptocurrency-related accounts.
According to Reuters, cryptocurrency exchange operators, investors, and analysts in the country claim crypto users are rushing to take advantage of the three-month deadline the Reserve Bank of India (RBI) gave banks to stop dealing with cryptocurrency users.
Buying cryptocurrencies now, the report adds, will allow traders to later on swap their funds for other coins via private trading platforms, even after the RBI’s ban takes hold, presumably at a premium.
Shivam Thakral, chief executive officer at local cryptocurrency exchange BuyUcoin, stated:
“There is a positive sentiment in the industry that the government will not ban trading in cryptocurrencies, and even if formal banking channels cannot be used, people can move to crypto-crypto trading platforms.”
Moreover, Thakral added that rising cryptocurrency prices are also contributing to the trading frenzy. According to data from CryptoCompare, Bitcoin’s price surged from about $6,900 to $9,650 in the last three days. Ethereum, the most searched-for cryptocurrency in India, went from $633 to $792 per token during the same time period.
According to Pune, India-based cryptocurrency exchange Coindelta, average daily trading volumes in the country hit a high of $75 million recently, despite the tough stance the government has taken against cryptocurrencies.
The government’s move reportedly came amid fears of cryptos being used to launder money and finance illegal activities. In February, the country’s Finance Minister reportedly claimed these should be banned as a payment method.
Analysts believe that banning cryptocurrencies is actually going be counterproductive. This, as cryptos will be outside of regulators’ views, where it would be much easier to use them to launder money or finance illegal activities.
Indian lawyers are reportedly advising clients to adopt a “wait and see” approach when it comes to their cryptocurrency investments. Investors, on the other hand, are optimistic. Thakral revealed:
“Unlike fiat currency, prices of virtual currencies are based on people’s beliefs and aspirations. The long-term vision for us and the people who are investing now is that cryptocurrencies are here to stay.”
While some investors would like to see the government lighten its stance against cryptocurrencies, some believe they will “probably” continue trading cryptocurrencies, even if illegal. Coindelta’s co-founder and head of business, Shubham Yadav, told Reuters the banking ban wouldn’t affect those who are already trading.
Most trading is set to move to peer-to-peer platforms like LocalBitcoins, or to social applications like Telegram. Some traders, per the report, have challenged RBI’s move in court, citing constitutional issues.