- RBI stops all dealings with bank accounts associated with crypto trading.
- This, however, should not be seen as a ban on cryptocurrency.
India: The Reserve Bank of India (RBI), which stands as the central bank of India, has taken a step to put an end to business dealings with all bank accounts associated with cryptocurrency. Yesterday, 5th April, RBI made an announcement through its “Statement on Developmental and Regulatory Policies”, that it will cease to engage in business dealing or provide any service to anyone or business associated with digital currencies. RBI, however, added that it is considering the possibility of launching own digital currency in near future.
Last January, the Finance Ministry of India condemned digital currencies, blaming their “lack of intrinsic value.” This made a number of well-known banks in India to close down bank accounts of cryptocurrency exchanges, while others limited the functionality of those accounts. In Feb., a fake news on the nationwide ban on cryptocurrency within India caused a FUD that made the values of cryptocurrencies fell.
The central bank added in its statement that though the Blockchain Technology that backs digital currencies:
“have the potential to improve the efficiency and inclusiveness of the financial system […] Virtual Currencies (VCs] […] raise concerns of consumer protection, market integrity and money laundering, among others.”
The bank continued by stating that it had already cautioned those who engage in cryptocurrency trading a number of times about the “various risks” involved in investing and trading in digital currencies before it finally stated that:
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time.”
An advisor and investor at India’s Blockchain and cryptocurrency communities, Panjak Jain, in response to the RBI’s statement posted a tweet which underlines the fact that the government of India “hasn’t banned crypto:”
1/ Today the Reserve Bank of #India issued a circular telling "entities registered with the RBI" (essentially banks, financial firms) to stop working with crypto exchanges and businesses. The Indian government, hasn't banned #crypto.
— Pankaj Jain (@pjain) April 5, 2018
The notable part of the statement that declares an end to RBI’s dealing with cryptocurrency traders is that it also states that RBI is considering launching its own digital currency in near future, and the documents on its feasibility should be submitted later in June.
RBI cited the:
“rapid changes in the landscape of the payments industry along with factors such as emergence of private digital tokens and the rising costs of managing fiat paper/metallic money,”
as a driving force to launch own digital currency.
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