RBI asks banks to stop services to those dealing in virtual currencies

  • RBI asks banks to stop services to those dealing in virtual currencies

RBI asks banks to stop services to those dealing in virtual currencies

It is the end of the road - at least for now - for millions of crypto enthusiasts in the country.

Mumbai: The Reserve Bank of India (RBI) on Thursday shared one bit of good news and another piece of bad news.

The move is set to impact almost 50 lakh Indians who have cryptocurrency investments. "As long as they don't declare (cryptocurrencies) as illegal we will continue transacting". The digital assets also raised flags over consumer protection, market integrity and money laundering, the bank said.

Industry players and experts say RBI's decision will encourage hawala trading and keep bitcoin trading out of the purview of income tax authorities.

"As opposed to private digital tokens, these are issued by a central bank".

And if they grow beyond a size, they can endanger financial stability.

The RBI has repeatedly warned citizens to tread cautiously when it comes to cryptocurrencies.

But Bitcoin and other cryptocurrencies are not legal tender in India.

Today, the Reserve Bank of India (RBI) released a statement directing all regulated entities, including banks, to stop dealing with individuals and businesses dabbling in virtual currencies. Significantly, Kanungo said that RBI regulated entities will have to unwind any existing business relationship with those dealing with VCs within three months. Many Indians flocked to digital currencies in response to that measure.

Consequently, operating a cryptocurrency business has gotten tough as it was reported back in January that the Ministry of Corporate Affairs has stopped registering any cryptocurrency exchange. Recent reports peg that blockchains' influence will expand to the ever-connected world of the Internet of Things (IoT), transforming it forever. This amounts to a ban on banks in dealing with companies or individuals that trade in cryptocurrencies.

Numbers 12 and 13 are of particular interest to cryptocurrency enthusiasts. This distinction is similar to last week's report of South Korea willing to launch its own brand of digital currencies, along with a lot of countries expressing similar lines of thought.

Furthermore, the RBI also revealed that it has been looking into the possibility of fiat digital currency and has set up an inter-departmental group to study and submit it findings. These are issued by the central bank, are considered the liability of the central bank.

"We can not 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", the exchange said.