India’s new PM, targeting people who skirt taxes, outlawed 500 and 1,000 rupee bills – a staple in ATMs in the country. He did it in what’s being called a “shock and awe” manner so that black market savers didn’t have enough money to figure something out to do about it.
People have stood in line at banks to receive new currency and ATMs, no longer stocked with the larger denominations, are running out of money. The moves will likely lead to an increase in demand for Bitcoin in India.
When Beijing issued new capital controls late 2015 to ensure money didn’t leave mainland China, Bitcoin demand in the world’s second-largest economy skyrocketed and so did the price of Bitcoin.
Now, Beijing is considering capital controls on Bitcoin because it sees how exchanges and investors can send funds overseas through the cryptocurrency.
When China imposed capital controls, it increased interest in Bitcoin, which was priced at $230 at that time. It’s priced around $700 at press. Bank of China Ltd. and China Citic Bank Corp. would bolster internal AML and KYC processes, as well, on large foreign-exchange conversions by corporations, according to banking executives there. In addition, financial regulators and law enforcement would crack down on individuals making a living out of helping people move money out of the country.
Beijing proved it was willing to act, and it pushed many people into Bitcoin. India is showing it too will move to go after those looking to skirt financial laws. It’s likely to learn people there, too, will turn to Bitcoin, similar to China. India made headlines throughout 2015 when it issued new controls on gold, which has a long tradition in the country as a savings and gift vehicle.
India is trying to move the country onto digital databases via various avenues. According to reports, some senior level members of the cabinet were not made aware of the transition. If word got out, hoarders could then empty their mattresses and launder their stashes into,say, precious metals.
On Google Trends, search queries around ‘Bitcoin’ in India have returned to near all-time highs. This portends increased buying.
Political and economic issues, such as now being dealt with in India, often lead to increased attention on Bitcoin. The Greek debt crisis demonstrated this, as did the Cypriot Financial Crisis, all in recent years. Thus, with increased demand, one could assume Bitcoin might see continued price increases as it has over the past year thanks to China’s growing demand as outlined above.
Images from Shutterstock.
Last modified: May 21, 2020 10:12 AM UTC