Tesla Inc. purchased around $1.5 billion worth of Bitcoins this week and will start accepting the crypto-currency as a payments instrument, according to its filing with the Securities and Exchange Commission of the United States. With Tesla’s latest investment, listed corporates, private companies and exchange-traded funds now own over $60.7 billion worth of Bitcoins as of date, according to Bitcoin Treasuries.
The Elon Musk owned electric-vehicle manufacturer is the latest corporation to purchase crypto-currencies as part of their treasury operations. The news led to This led to Bitcoins’ price soaring to a historical high of $47,000 on February 9, according to Coinbase.
The company says that it updated its investment policy last month “to provide us with more flexibility to further diversify and maximize returns on our cash.” Tesla will keep investing a portion of its cash, over and above its operating liquidity requirements, in specific alternative assets going forward. “Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” it said.
With Bitcoins’ price surging by 241% over the last three months, Musk has been increasingly vocal about Bitcoins’ growing acceptance as the future of finance will be crypto-based. He recently said that his friends had tried to convince him to get involved in Bitcoins as far back as 2013, according to CNBC.
“Clearly … should have at least bought some bitcoin eight years ago — talk about being late to the party,” he said during a conversation on the Clubhouse audio chat app. “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin…I think bitcoin is really on the verge of getting broad acceptance by conventional finance people.” he said.
‘Government should consider growing acceptance among institutions’
The Indian government, on its part, plans to ban “private” crypto-currencies through a new piece of legislation. According to the official Lok Sabha Bulletin Part II for the Budget Session of Parliament 2021, the government plans to introduce The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will ban crypto-trading and investing, while at the same time providing the Reserve Bank of India (RBI) with the requisite legal powers to develop a develop its own central bank-backed digital currency (CBDC).
This is a similar approach to that of China, which banned trading and investments in crypto-currencies prior to developing its CBDC, which is still being tested.
Rahul Pagidipati, chief executive officer, ZebPay says that while the news was a surprise, it was not really a surprise since Musk has been vocal about Bitcoin for a while. “The number of users on ZebPay did more than double right after the news. It’s a sign to other companies that bitcoin is a solid reserve asset for any balance sheet. We hope central banks will join in and that this news helps nudge the government to buy, not ban bitcoin and let every Indian do the same,” he said.
According to Sumit Gupta, co-founder and chief executive officer, CoinDCX, this move signifies the potential of the digital assets industry, which should not be ignored by Indian regulators and policy makers. “This will enhance trust for cryptocurrencies as an investment class among investors, both retail and institutional across the globe. We have seen heavy participation from the institutional investors in the recent past. We therefore expect the government to consider these developments and come up with favourable regulations that will benefit the investors and the Indian crypto ecosystem,” he said.