Why India is in desperate need of cryptocurrency regulations? – Quartz India

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An alleged scam involving a coin based on the hit Netflix show Squid Game has shocked the global cryptocurrency ecosystem. In India, she once again stressed the need for regulation.

The Squid Game token saw a meteoric rise shortly after launching a few weeks ago and a rapid market crash last week cost investors millions of dollars.

Despite the industry’s efforts to educate crypto enthusiasts, many Indian investors have burned their fingers in the frenzy.

“I bought the SquidGame token and it was the worst decision of my life… I lost a ton of money,” an Indian investor named Gamer Genie told Quartz on Twitter. He lost about $ 11,500.

The fiasco is not the first. It’s unlikely to be the last one either.

For example, in September 2020, the creator of SushiSwap disappeared following a $ 13 million (Rs 96.6 crore) ‘carpet draw’ – when the creators of a token abruptly abandoned him, exchanging many virtual coins for real money.

This is why it is essential to “do your own research” before investing.

“It is very important for investors to research new token projects before investing,” said Kapil Rathi, CEO and founder of global cryptocurrency trading platform CrossTower. “In a sense, we have an innovation that we don’t want to stifle, but, on the other hand, we also have negative use cases that could emerge if the country did not have a protection policy.”

What happened with the Squid Game token?

The South Korean survival drama series Squid Game was trending in 94 countries when it was released on September 17 of this year.

This inspired a ‘play to win’ cryptocurrency, where people bought tokens to use in online games and earned more tokens that could later be exchanged for other cryptocurrencies or national currencies.

The token’s now defunct website was registered on October 12, and its white paper was released the last week of October, albeit with many red flags, including grammar and spelling errors.

Within a week of trading, the price of the same coin jumped to $ 2,861, from just $ 0.01. Concerns about its legitimacy arose after investors noted that it could only be bought instead of sold.

“Anyone can create a pool of tokens and cash, so this is a common risk for new projects run by anons (anonymous),” said Patrick McCorry, CEO of PISA Research and former assistant professor of crypto. coins and security engineering at King’s College London. Wireframe magazine.

On November 1 (Monday), in just 15 minutes, the price of the Squid Game token dropped to less than half a cent, according to cryptocurrency data website CoinMarketCap. The developers reportedly escaped with $ 3 million (22 crore rupees) of the proceeds from the investors.

The “rug pull” has kept Binance, the world’s largest cryptocurrency exchange, on its toes, as the token protocol was developed on its decentralized platform.

“We’re entering a period of peak speculation – people are looking for the next get-rich-quick scheme or a 100X opportunity. The truth is, these 100X don’t come often. And when they do, they usually come with a ton of risk, ”Binance CEO and co-founder Changpeng Zhao said in a blog post.

The popularity of the Squid Game Show in India

The covid-19 pandemic has turned online entertainment into a major draw, with South Korean broadcasts gaining popularity in India.

The penchant for Korean culture has become evident in the preferences of millennials for clothing, music, food, language, and beauty products.

Many Indian companies have since focused on all things Korean. Squid Game has been an opportunity for many of them.

Pune-based game developer SuperGaming has even introduced a new game, Squid Royale Games, based on the Netflix show. It has already collected 456,000 pre-registrations.

While the exact number of Indian investors in the Squid Game coin is unclear, the popularity of the show in the country and the exponential growth of the cryptocurrency community here indicate a powerful combination.

No regulation yet in India

One-sixth of urban Indians invest in virtual tokens, according to a survey by consulting firm Kantar. While the government is inclined towards a ban, market players have argued for regulation.

“The Indian government should work with the crypto industry and representative bodies to create a functional regulatory framework and consider international approaches to crypto-regulation, especially in terms of cross-border aspects,” said Rathi of CrossTower.

In the absence of guidelines, the Internet and Mobile Association of India (IAMAI), in June, established a formal Blockchain and Crypto Assets Council (BACC) to oversee the implementation of a code of conduct for ‘self-regulation for member crypto exchanges. .

Currently, all major crypto exchanges in India are members of BACC.

A request to the BACC for details of existing regulatory compliance went unanswered.

Investors are now eagerly awaiting the Cryptocurrency and Official Digital Currency Regulation Bill, 2021, also known as the Crypto Bill, which is expected to be considered in the winter session. of the Indian parliament.

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