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Indian private sector bank HDFC issues ‘threatening’ emails against cryptocurrency buyers




Indian Private Sector bank HDFC issues threatening emails against cryptocurrency purchase
Source: Pixabay

The Indian government and the country’s banking sector’s negative stance against the cryptocurrency industry have reached new heights. The Housing Development Finance Corporation Ltd [HDFC], the largest private lender in India has been ramping up its efforts in opposition of the country’s cryptocurrency industry.

According to a tweet by Indian virtual currency proponent Indian CryptoGirl, HDFC has begun disseminating “threatening” e-mails to those users who purchased cryptocurrencies. In what is already a tumultuous environment for virtual currencies in the South Asian country, things look to get worse.

The tweet further stated that users would have to “clarify” the nature of their transaction within a 30-day period, failing which the bank would “freeze” the account. A screenshot of a message, presumably sent to a customer from HDFC, stated:

“We have observed that Virtual Currency transactions are reflected in your account and, as per RBI guidelines it is not permitted.”

HDFC stated that they would “restrict transactions” with respect to the stated account if the customer did not make clear the nature of the transactions within the aforementioned period. The bank added, referencing a recent RBI guideline:

“Banks are advised to exercise due diligence by closely examining the transactions carried out in the account on an ongoing basis to caution users, holders and traders of Virtual Currencies (VCs) including Bitcoins regarding risks.”

A screenshot of the same is given below:

Source: Twitter

This is not HDFC’s first regulatory backlash against the country’s cryptocurrency sector. In January, the bank tracked cryptocurrency-related transactions to certain user accounts and made them sign consent forms. The consent form was a precursor to the bank shutting such accounts if crypto-trading persists.

Other Indian banks including Kotak Bank and Digibank have also sent similar notices to customers suspected of trading virtual currencies.

Recently, a report by the Economic Times, an Indian financial daily, stated that a draft titled the “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019” was circulated among several government agencies overseeing taxes, customs, and investor education.

The draft stated that “there is an urgent need to ban sale purchase and issuance of cryptocurrency”. However, the “final law” will only be tabled before the next government, following the country’s general elections, by the end of May.

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JP Morgan: Big banks stand corrected as Bitcoin rally past intrinsic value; admits current surge mirrors 2017 rise




JP Morgan: Big bank stands corrected at Bitcoin rally past intrinsic value; admits current surge mirrors 2017 rise
Source: Pixabay

Big banks are riding a FOMO wave as the Bitcoin bull-run is just beginning. Spearheaded by the changing colors of JP Morgan, which recently forayed into the digital assets world, the banking elite is now suggesting that their initial stance on Bitcoin and the larger cryptocurrency world might have been off.

A recent chart by JP Morgan shows the current BTC price veer upwards chiding the “intrinsic value” the big bank placed on the virtual currency.

Based on the article by Bloomberg, the price of the coin would reverse towards the end of December 2018 and then make marginal gains until May 2019, all under the $5,000 mark. In reality, the BTC price, after dropping to “rock bottom” at just above $3,100 in early December 2018, edged upwards.

Several spurts of growth were seen in early January and February, prior to a massive April ascendance. On April 2, Bitcoin did away with the bank’s value mode and amassed a daily gain of over 15 percent, fuelling its current rise. Breaking the $5,000 ceiling in the process, which was pegged to remain intact well into May 2019, the king coin is now almost $3,000 ahead of the mark and is not looking to stop.

Source: Bloomberg

It should be noted that JP Morgan’s “intrinsic value” is calculated on the basis of the marginal cost of production, electricity prices, and hash rates. This model does not take into account, at least on absolute terms, the anticipatory effect of the 2020 halving, which, according to a slew of analysts is the behind the price rise.

Nikolaos Panigirtzoglou, the MD in the Global Market Strategy team at JP Morgan stated that Bitcoin breaking through its “intrinsic value” showed signs of mirroring its 2017 bull run. He evidenced this move by comparing the pre-December 2017 slump to the one seen prior to the current bullish swing.

The analyst added:

“Over the past few days, the actual price has moved sharply over marginal cost. This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”

With the analyst admitting that the imparting of an “intrinsic or fair value” to a cryptocurrency, much less a volatile one like Bitcoin, is a “challenging” ordeal, a mere JP Morgan acknowledgement of a Bitcoin bull-run is a remarkable sign for the digital assets industry, especially given the bank’s and its CEO Jamie Dimon’s Bitcoin-bashing in the past.

Mati Greenspan, senior market analyst at eToro attested to the same, adding a key point that JP Morgan failed to take into account in their calculation. He stated:

“Great to see JPM finally admitting that Bitcoin has intrinsic value.
Now wait till they understand that miners who run a surplus tend to begin hording.”

Despite Bitcoin slumping at press time, recording a 1.23 percent decline against the dollar, the prospects look positive. After recording a massive gain on 19 May, briefly surging past $8,000 for the second time in a week, Bitcoin created a High-Low [HL] at $7,100, which many analysts look at with glee.

This HL immediately following last week’s pull-back caused due to post-Consensus bears, a Bitstamp sell-order and market correction showed the king coin’s bullish persistence and can even be a foundation for a $9,000 ascendance, defying any “intrinsic value” expectations.

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