Views on Recent Price Action of Cryptocurrencies : Tesla, RBI and others

Cryptocurrency exchanges in India, including CoinSwitch Kuber and WazirX, have discontinued rupee deposits for new users on their platforms after some banks cut ties with them, citing an informal guidance from the Reserve Bank of India (RBI).

The RBI move came despite the Supreme Court in March last year quashing a ban on crypto-related payments. The Supreme court, vide judgment dated March 4, 2020, lifted the ban and allowed people to buy and sell cryptocurrencies when RBI had banned cryptocurrency transactions earlier.

The RBI has informally told banks to stay away from businesses dealing in cryptocurrencies, though there is no official communication in this regard.

Bitcoin price declined as much as 10% to $38,973 on Wednesday, its lowest level since early February. Cryptocurrencies are facing difficulties all over the world right now as all digital currencies declining over the past week.

There are many other global factors of cryptocurrency decline, such as-

China denied digital currency for payments

Bitcoin and other major cryptocurrencies fell after the People’s Bank of China carried a statement restating that digital currencies can not be used as a form of payment.

Virtual currencies can not and should not be used in the market because they are not real currencies, according to a notice posted on the People’s Bank of China official WeChat account. Payments and financial institutions are not allowed to price products or services with cryptocurrency, the notice said.

China has recently taken actions to issue its own digital currency (digital yuan), seeking to replace cash and to keep control over a payments landscape that has become increasingly dominated by technology companies and not regulated like banks.

Tesla stops taking bitcoin for vehicle purchase

Tesla has discontinued vehicle purchases using Bitcoin due to climate change concerns, Tesla CEO Elon Musk said in a tweet.

In March 2021, Tesla announced that it would accept the cryptocurrency for Tesla vehicle purchase. After this, many environmentalists and investors showed concern over energy consumption and carbon emissions.

In his tweet, Elon Musk said, “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment. We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”

He also said the electric carmaker would not sell any of its Bitcoin and intends to use it for transactions as soon as mining shifts to using more sustainable energy.

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