This week all eyes are watching India as citizens are having trouble accessing cash reserves as ATMs run dry throughout the country. Alongside these troublesome economic times, bitcoin trading is increasing substantially in India, as the country is one of the hottest bitcoin regions in the world right now next to China and Japan.
Banks and ATMs Run out of Cash Throughout India
Right now there is significant demand in India for cash as banks and ATMs within the country are currently experiencing a shortage of physical notes. According to regional publications, some regions in India are reporting 90 percent of the local ATMs do not have cash. Sources in the country say the Reserve Bank of India (RBI) has moved some of its cash reserves to certain areas within the country due to the recent elections.
Furthermore, the State Bank of India (SBI) has revealed the cash crisis has caused customers to start losing confidence in the system because there is nothing local bank executives can do.
“Nearly 70 percent of our 648 ATMs in the three districts are out of cash. The rest will also become dry in the next few days as we do not have cash to refill the machines. We are helpless from our side,” said the deputy general manager of SBI, Ajoy Kumar Pandit.
The Digital Asset and Blockchain Foundation of India
Recently some members of the Indian government have made some negative statements towards bitcoin, but it hasn’t slowed down cryptocurrency demand in India. Additionally, leaders within the region have formed a committee to investigate the cryptocurrency and will release a report on bitcoin in three months. A few days after the government committee formation, bitcoin startups within the region also created a coalition to discuss the subject with Indian officials.
The companies involved with the newly formed group called the “Digital Asset and Blockchain Foundation of India” (DABFI) include Bitcoin-focused startups such as Zebpay, Unocoin, Coinsecure and Searchtrade.
“We request the committee to give us an opportunity to meet them and showcase the benefits of this technology for our country,” explained the DABFI. “Financial inclusion, cheaper cross-border remittance, full trace and track on the movement of value on the blockchain network, and the potential for India to become a financial hub are key benefits that can be derived using virtual currencies.”
Bitcoin Demand Growing as Indian Traders Take in Profits
Alongside cash demand, Bitcoin is doing phenomenally well in India, and there is significant market demand for the decentralized currency. Localbitcoins volumes in India are still very high with an average of 20,000,000 INR or $300,000 USD during the first week of April. Furthermore, price spreads across Indian exchanges are currently $50 higher than most global averages at the time of writing.
Moreover, just like in China, bitcoin traders and enthusiasts are doing quite well in India trading bitcoin. According to a recent article from the Times of India, the decentralized cryptocurrency is becoming attractive because it can be used to move money across the world in a permissionless way. Benson Samuel, CTO, and founder of exchange Coinsecure has found customers are using the exchange for arbitrage. “One lady used to buy from our exchange, and within a few hours, sell it on another. That works because different exchanges have different prices,” explains Samuel.
Speculative Asset for Now
As cash reserves run dry in India, many citizens have found a safe haven and store of value with bitcoin. Right now most Indians look at bitcoin as an asset class and are waiting for the government to consider it a legal form of payment much like Japan’s recent rulings.
“Like gold, Indians believe that to be an asset class, and its actual use case is only 1% of total transaction value. We believe that once Indian merchants get clarity on regulation and taxation of bitcoins, we will see them using it as a payment gateway,” Saurabh Agarwal, co-founder, and CEO of Indian Bitcoin exchange Zebpay adds.
Images via Shutterstock, Pixabay, DABFI, and Zerohedge.