Will they ban it? They will not? Uncertainty persists about India's approach to cryptocurrencies.
Nervousness worsened after the government listed a bill for presentation in the next session of parliament. The bill's description said that it was intended to ban private cryptocurrencies. A Bloomberg report suggested that the ban may not be full.
Overcome by panic Investors first sold their tokens on the local market, where prices fell sharply, only to recover later.
As crypto investors await clarity on the path the government will take, they may be wondering, "What if ...?"
These are the options available to anyone who needs or wants to secure their investment in these tokens.
Selling and exiting may seem like the obvious choice. But in the case of cryptocurrencies, it is not always that simple.
Prices in the local market may have fallen due to a risk event, like the one we saw this week, allowing you to earn less than your global peers. Also, trading volumes vary between exchanges and it can be difficult to find buyers in the middle of a sale.
Still, all exchanges will allow you to sell your cryptocurrencies and exit through a fiat currency conversion.
However, for now, exchanges are advising caution and asking investors not to panic when selling.
"I urge all crypto asset investors in the country to remain calm, do your own research before reaching a hasty conclusion. Investors should wait for a statement from the government on this matter and not rely on secondary sources of information," he said Ashish Singhal, founder and CEO of CoinSwitch Kuber in a statement.
Rather than trying to exit in the middle of a sell-off, investors could move their tokens from one exchange to another in a different jurisdiction. But not all exchanges offer this option.
WazirX allows users to transfer or withdraw their cryptocurrency holdings from their own wallet to a Binance wallet, without any fees or charges. Binance acquired the Indian cryptocurrency exchange in late 2019, providing it with a foothold in the second most populous country in the world.
"Users can transfer their holdings from one exchange to another. There is a small fee for withdrawals," a WazirX spokesperson told BloombergQuint. Transfers to Binance have briefly been kept free.
Other major Indian cryptocurrency exchanges such as CoinDCX, ZebPay, Giottus, Unocoin, and Bitbns also offer a withdrawal service, based on information available on their websites. The withdrawal fee is a flat fee that is charged in decimals of the same token that you are trying to get out of. It varies for each cryptocurrency, but it does not depend on how many coins are transferred.
To transfer shares, a user simply has to provide the address of their new exchange account or wallet. Transfers are smooth and fast.
CoinSwitch Kuber is an outlier and does not allow the transfer of cryptocurrencies.
"Our goal is to be an investment platform and we want to encourage long-term tenure practices," said Singhal of CoinSwitch Kuber. "At the same time, withdrawals are a problem for regulators because it is difficult to trace or determine its destination or future route. Even the exchange cannot track it, opening a new Pandora's box due to concerns of illicit transactions."
A third option is to store your tokens in a wallet while you decide what to do with them.
App-based or web-based cryptocurrency wallets like MetaMask, Freewallet, Electrum, and more are widely used. These are virtual and also called hot wallets, because they can store the private keys of the currency or token on the Internet.
There are also cold wallets. Unlike cloud-based wallets, cold wallets store information locally and work independently of the internet. A near-field communication chip, an offline computer, or even a piece of paper can be called a cold wallet.
Hardware wallets, on the other hand, are plug-and-use devices that are similar to a USB stick. "These are considered more secure because they are physical and portable. Think of it like a conventional vault, but much smaller. They need to be handled with care, as any damage to the storage drive can render all tokens unrecoverable if the password or the pneumatic chain doesn't. "I have a backup," said Sidharth Sogani, founder and CEO of Crebaco Global, a blockchain-focused research company.
Some popular hardware wallet options for storing digital assets are Trezor, Ledger, and SafePal, Sogani said.
