Bitcoin has gained over 44% in value in nearly 16 months after the Reserve Bank of India (RBI) banned dealing in virtual currencies. On July 5 last year, Bitcoin stood at $6,541.79 which has now risen to $9,450.68, translating into a rise of 44.47% during the period. Bitcoin hit its all-time high of $19,498.63 on December 18, 2017.
July 5 was the deadline fixed by RBI in its April 6 circular last year to put a blanket ban on dealing in cryptocurrency. The RBI had in April said the entities that it regulates shall not deal in virtual currencies, preventing banks from offering services to cryptocurrency exchanges.
RBI had given three months to banks to stop offering services to individuals and businesses dealing in virtual currencies.
The move came after it was observed that several companies had started dealing in digital currencies which, the government and the RBI claim, had no intrinsic value - therefore leaving the investors at risk. The RBI's move was an attempt to ring-fence regulated entities from risks associated with cryptocurrencies. Since December 2013, the RBI had issued four warnings against Bitcoin and other crypto-currencies.
Days before the deadline for trading in bitcoin ended, the Finance Ministry had also made it clear that virtual currencies were not legal tender and such currencies had no protection.
After the RBI issued circular on April 5, many cryptocurrency exchanges started winding up their business in the country. One of the biggest digital currency exchanges, Zebpay, asked its users to withdraw their money before the RBI deadline.
But some others such as WazirX and Koinex Loop started working on a peer-to-peer model to facilitate virtual currency trade without using banking channels and prominent digital marketplaces.