Indian cryptocurrencies suffer heavy sellers

Plans by the Indian government to ban most private cryptocurrencies has resulted in heavy selling of the country's digital currency markets as investors look to exit positions despite the losses, said traders and investors.

The legislation released late on Tuesday for the winter session of Parliament will allow the government to allow only certain cryptocurrencies to promote the underlying technology and its uses.

If passed, it would effectively ban citizens from India from transacting in cryptocurrencies.

The dollar-linked stable coin tetherUSDT dropped 25 per cent to close to 60 rupees $0.8061 on Wednesday after news of the bill, according to Naimish Sanghvi, a cryptocurrency investor.

A second investor said that the value of his portfolio had fallen to 22,000 rupees from 34,000 rupees on Tuesday as a result of the heavy selling.

"I am contemplating selling because the future is so unclear," said the investor, who asked not to be named, because the information is sensitive.

The high volume of selling caused many exchanges to face deposit and withdrawal challenges, according to traders of criptocurrencies.

One of the biggest exchanges in India, WazirX, said earlier on its official Twitter account that it was investigating reports that users were facing delays on its app and website. The issue was resolved, the issue was later said.

There are about 15 million to 20 million cryptocurrencies investors in India, with total holdings of around 400 billion rupees, according to industry estimates. There is no official data available on the user base and the holdings of cyrptocurrency.