Plans by the government for a new bill that would bar most private cryptocurrencies has triggered heavy selling in the country’s digital currency markets, as investors look to exit positions despite the losses, said traders and investors.
The government will allow only certain cryptocurrencies to promote the underlying technology and its uses, according to a legislative agenda for the winter session of Parliament set to start this month.
The bill, if passed, would effectively ban Indian citizens from transacting in most cryptocurrencies.
The dollar-linked stable coin tether (USDT) slumped 25% to almost ₹60 on Wednesday after news of the bill, according to Naimish Sanghvi, a cryptocurrency investor.
A second crypto investor said the value of his portfolio had fallen to about ₹22,000 from ₹34,000 on Tuesday as a result of the heavy selling.
“I am contemplating selling because the future is so unclear,” said the investor, who asked not to be named.
Several exchanges were facing deposit and withdrawal challenges due to the high volume of selling, said cryptocurrency traders.
WazirX, one of India’s largest cryptocurrency exchanges, said earlier on its Twitter account that it was investigating reports that users were facing delays on its app and website. It later said the issue had been resolved.
There are an estimated 15-20 million cryptocurrency investors in India, with total crypto holdings of about ₹400 billion, according to industry estimates.