Cryptocurrency has been having a wonderful 2021 in terms of gains across the board. The asset class has certainly churned out its fair share of millionaires, seeing altcoins boom by thousands of percent, and seeing Bitcoin (CCC:BTC-USD) add over $30,000 in value since 2020. But alongside those gains comes a fair share of scrutiny by governments worldwide. China began its big crypto crackdown in the spring. The U.S. is seeing lawmakers meet over how the assets should be regulated. As cryptos falter today in a market-wide correction, investors are wondering, “Why is crypto down today?” To answer that, we can look largely to India’s ongoing crypto situation.
India is the newest nation to join the likes of the U.S. and China in increasing scrutiny over the runaway crypto market. Late in November, India proposed legislation similar to China’s, cracking down hard on privately issued cryptocurrency. Also like China, the proposed legislature comes with a structure for the launch of an Indian Central Bank Digital Currency (CBDC). CBDCs are a popular response among nations to the growing ubiquity of cryptocurrency. Of course, this is largely because they can continue regulating CBDCs and managing them much like traditional fiat.
This news caused a bit of a stir when it first surfaced. Indeed, it closed out an otherwise positive month for the asset class with some slight losses. This volatility follows the same pattern that China demonstrated earlier in the year with its many moves to crack down on digital money.
Indian Prime Minister Helps to Send Crypto Into Disarray With Call For Global Regulation of Digital Currency
India has continued to make headlines in the weeks following the initial proposal. Earlier this week, it came to light that the nation plans on bringing about jail sentences for those found violating the proposed cryptocurrency legislation. But why is crypto down today specifically? It’s because India is taking its crackdown to the world stage and calling on others to do the same.
The country’s Prime Minister, Narendra Modi, spoke at the U.S.-hosted Democracy Summit. The summit saw dozens of nations worldwide come together virtually to talk about a number of issues, crypto being one of them. In his speech at this summit, Modi called on other nations to follow its lead in regulating crypto. Modi would go on to say that cryptocurrency in its current state undermines democracies.
Modi’s speech is an obviously bearish signal for the asset class. The Democracy Summit saw massive turnout, with many European and African countries in attendance. If this speech resonates with these countries, it could certainly stifle the growth of cryptocurrency. As such, investors are seeing lots of price slippage today.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
