RBI Prohibits Banks from supporting Cryptocurrencies
April 6, 2018 10:39 am
RBI Bans Banks from doing business with Cryptocurrency Companies
In a major strike on bitcoin exchanges in the nation, Reserve Bank of India (RBI) on Thursday has directed all regulated entities, including banks, from giving any services to any person or business dealing in cryptocurrencies. The Central bank has given three months to the banks to end all existing ties with bitcoin players. Still, the central bank, in an unusual move, said it is interested in floating its digital currency.
Reserve Bank of India said in a statement:
“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 [cryptocurrencies]. Regulated entities which already provide such services shall exit the relationship within a specified time.”
RBI move to crack down on the digital currencies comes two months after Finance Minister Arun Jaitley in his Budget speech said that cryptocurrencies couldn’t be perceived as a legal tender. However, in the last couple of weeks, many other nations, including Japan, the country where Bitcoin is rumoured to have originated has likewise cautioned its people not to use digital currencies.
According to the report, RBI Deputy Governor BP Kanungo told the media on Thursday that the “specified time” would be three months.
At least one digital currency exchange in India has downplayed. As per a statement issued on Twitter, PocketBits contended that transactions in the nation have mostly been cut off from the banking access already.
The exchange said:
“We cannot comment on the times ahead, but there is no need to panic, RBI has just reiterated what they have already implemented, THERE IS NO BAN ON BITCOIN in India as of yet, there is no official stand of the government on this. This is just the Central Bank of India taking a stand against a technology which they are going to implement themselves regarding a Digital Rupee.”
In the meantime, there was no remark from the digital currency exchanges working in the Indian market. Zebpay, a leading player in this segment, said they are yet to analyzing the RBI circular and would respond accordingly if needed.
The Bank has already issued warnings on digital currencies, the first was announced in 2013. They release a new sign in December, alerting users that it has not authorized any organization to work with digital currencies and showed specific concerns related to ICOs.
In the same statement on Thursday, RBI said that they are setting up a working group to study the issue of circulating its cryptocurrency.
“Rapid changes in the landscape of the payments industry along with factors such as [the] emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies.”
The Central Bank clarifies, adding:
“While many central banks are still engaged in the debate, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency.”