Praveen Kumar of Belfrics Global SDH on how the year was for cryptocurrencies, its acceptance worldwide, regulatory challenges, and more
The year 2017 will be remembered as the year of bitcoin. Super returns, mass speculative hysteria, government discomfort, tax department focus and then a hard landing. If you had Rs1 lakh of bitcoins on 1 January 2017, on 26 December, you would have seen it grow to around Rs10 lakh. In India, while bitcoin remains outside the regulatory reach, the income-tax department is now beginning to send notices to high net worth individuals with bitcoin capital gains. The Enforcement Directorate is looking into possible The Foreign Exchange Management Act (Fema) violations. The hard hand of the law is coming to Bit-town. To understand what happened in 2017, Mint spoke to, Praveen Kumar, chairman and chief executive officer of Belfrics Global SDH, a company that runs bitcoin exchanges in Singapore, Malaysia, Bahrain, Japan, Kenya, Nigeria, Tanzania and India. Edited excerpts:
How did the year look like for cryptocurrencies especially bitcoin?
Beginning of 2017, banks and financial institutions started considering blockchain especially with cryptocurrencies. When I started working in the cryptocurrency space in 2013, even the blockchain concept was not accepted by the institutions. In 2016-17, a few banks globally started working on bitcoins on blockchain…accepting bitcoin transactions .
It was a healthy market in 2017 which gave you value buying. People started knowing about bitcoin. For instance, demand in Asia started picking up though the volume was less.
Media started talking about it. A euphoria started building and prices increased to a speculative nature.
Why do you say prices of bitcoin is speculative now?
In 2013, it was not very smooth for bitcoins transactions. Later the code was modified. Price used to move a lot at that time as well. For 2014, China news was controlling bitcoin pricing. In 2015, when Asian countries came to know about cryptocurrencies, the first one they got to know about was bitcoin. I would have been happy if bitcoin was trading between $10,000 and $12,000.
The pricing at $20,000 was simply euphoric. Even if prices go up further, 9 out of 10 people who have put money in bitcoins don’t understand it. Hence, people look at it from a very short-term perspective. The year 2018 is going to define what cryptocurrency will be for government and the impact will be seen on prices as well.
In terms of regulations, what happened in 2017?
In 2017, countries such as Japan, the US, Australia and Philippines have regulated bitcoin. Even when China banned bitcoin exchanges and Initial Coin Offerings (ICOs), they didn’t say holding it is illegal. Russia had earlier banned it, then retracted it.
Right now they are studying it. They are planning to come up with their own currency. The latest news is that this month Belarus legalized bitcoin. In Malaysia, the government is set to legalize the cryptocurrency by March.
Singapore has a holistic approach. It won’t simply put regulation. Growth of ICOs (initial coin offerings) has prompted it to come up with anti-money laundering guidelines so that exchanges like us can be put under similar requirement as the banks’ reporting system.