India Pushes For Crypto Regulation As Bitcoin Retreats Amid Inflation

by James · February 28, 2023

Several countries are proposing regulatory measures in the cryptocurrency market, including economic heavyweight India. The country receives support from the International Monetary Fund (IMF) and the United States.

At a G20 seminar, India called for “a collective global effort to deal with problems caused by cryptocurrencies like bitcoin, and the finance ministry said it had held a seminar for G20 member countries to discuss how to come up with a common framework.” per a WION report. That became all too clear after last year’s cryptocurrency bear market, which culminated in the fall of cryptocurrency exchange FTX.

However, this does not necessarily spell doom for cryptocurrencies. Adding a regulatory overlay to the crypto market could bring more investors into digital assets, especially those hesitant due to a lack of regulation.

“We have not proposed an outright ban on crypto activities, but it is critical to put a strong regulatory framework in place,” US Treasury Secretary Janet Yellen told Reuters. “We work with other governments.”

“Stubborn and Sticky” Inflation Moves Bitcoin

Bitcoin, meanwhile, has pulled back from recent highs to start 2023. As inflation fears once again grip capital markets, the same downward pressure on traditional financial assets like stocks and bonds is also affecting cryptocurrencies.

This connection was evident last year when cryptocurrencies largely followed both stocks and bonds down, amid inflation fears and rising interest rates. The US Federal Reserve has already acknowledged that it will take time to tame inflation, which means more volatility could be ahead for bitcoin and other cryptocurrencies.

“Inflation remains stubborn and sticky between 4%-5%,” tweeted RSM Chief Economist Joe Brusuelas. “Services inflation continues to rise as goods disinflation cools. [The] risk of an increase of 50 basis points in March [is] rising, and we manage to move towards a policy peak of at least 5.5%.”

January Inflation and policy takeaway: inflation remains stubborn and sticky between 4-5%. Services growth continues to increase as goods disinflation cools. The risk of a 50 bps increase in March rises and we manage to move towards a policy peak of at least 5.5%. pic.twitter.com/SrF1D2BBdD

— Joseph Brusuelas (@joebrusuelas) 24 February 2023