Trading In Digital Currency in India Is Regarded As Playing With Fire
Though regulators around the world are tightening their noose on the cryptocurrency market, investors still face the heat. That is primarily because of threats of losing money in the virtual currency market since there is no guarantee that they could get back their money. One of the primary reasons for it is that such digital coin does not produce anything and a lot of hopes depend on someone will pay a higher price. Therefore, some of the players have started a feeling that trading in cryptocurrency is nothing but playing with fire.
Vulnerable To Scams
Though there are supporters of the digital currency and the adoption rate is also getting wider, investors do not rule out any scams or treating it as Ponzi schemes, DNA India reported. This was quite evident when a number of serious players indicated that they had lost their complete investment as they have experimented in trading them. The Indian government has taken a stand that trading in digital currencies is not legal. Therefore, there is very little hope for investors to recover their money from the virtual currency market. The government took a stand-in April to ban trading in India. Before this, finance minister Arun Jaitley reiterated the Reserve Bank of India opinion that cryptocurrency is not a legal tender.
One of the industry insiders has reportedly told the media that traders are vulnerable. The report quoted an individual as saying that “What happened before the stock market was regularized is happening now. People are forming fake companies and selling bitcoins and other cryptocurrencies, which have no value. There is no way people can get their money back once the website is shut down.” Though people are trying to lodge a complaint with the police, they don’t look at it as a crime.
However, the main cause of worry appears to the circular issued by the RBI. The central bank directed all commercial banks to withdraw their services to any cryptocurrency exchanges. One of the industry insiders believes that the circular has increased the risk factor significantly. Also, the exchanges are to be blamed since they have tried to take advantage of the situation and showed their greed.
A number of traders entered the cryptocurrency market late last year when the market was nearing the lifetime highs. However, fears have increased after the overall market took a beating following the regulatory moves around the world. The cryptocurrency exchanges were assessing the fear and forced traders to sell at a significantly lower price.
Exchanges Make Money
The moment a customer leave the cryptocurrency at throwaway prices, those crypto exchanges have only made big profits. That is primarily because these exchanges could sell the virtual currency in the global exchanges at over ten times the rate. However, some of them were also driven to close the exchange.
The industry insider pointed out that if anyone traded on buybitcoin.org.in, then he or she might have been a victim of scam since the exchange stopped operations. It was apparently closed after the RBI mandate. As a result, ten million worth of local currency was stuck in the wallet. Investors are not ready to buy the argument that banks had stopped services when they wanted to withdraw their money.