Indian Reserve Bank Banning Buying And Selling of Virtual Currencies Including Bitcoin

Indian Reserve Bank Banning Buying And Selling of Virtual Currencies Including Bitcoin
Sudhir Khatwani

RBI - Reserve bank of India cryptocurrency statement

Breaking news!

The crypto saga of India continues:

RBI today wrote in its press release that they are thinking of introducing 'Central Bank Digital Currency' in India.

"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. 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. The Report will be submitted by end-June 2018." it said (Source).

So you see India is planning to launch its own fiat like cryptocurrency and of course, the name is nowhere close to 'Laxmi Coin'.

And it gets interesting:

As there is more in the Pandora box of RBI because they have started ring-fencing regulated entities from virtual currencies.

And guess who are the regulated entities, of course, the banks through which you do your NEFTs to Zebpay or Unocoin like services.

Their statement said:

Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. However, Virtual Currencies (VCs), also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity, and money laundering, among others.

Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated with dealing with such virtual currencies. 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. A circular in this regard is being issued separately. (Source)

So what does this means:

It means potentially banks that are in the relationship with Indian exchanges like BitbNS, Unocoin etc can be hit hard as banks will stop servicing them. Also, the investors will not be able to wire transfer money in their fiat accounts to buy cryptocurrencies in exchange, if this turns out to be true.

Earlier in February 2018, the Finance Minister of India sent a wave of FUD amongst the crypto community in India which was misinterpreted by the mainstream media.

He said:

The Government does not consider Cryptocurrencies "as Legal Tender or Coin" and will take all measures to eliminate the use of these Crypto Assets in Financing "Illegitimate Activities" or a Part of the Payment System.

Which meant further that, cryptocurrencies like Bitcoin are not banned India but the Indian government will be consciously cracking down the illegal activities that happen via BTC or other cryptocurrencies and this is similar to keeping a check on illegal activities in USD or INR terms. (Read the backstory here: Is India Banning Cryptocurrencies? Here Is The Truth)

But this time the RBI has seriously directed RBI regulated entities to stop servicing individuals or businesses dealing with or settling virtual currencies like BTC or ETH, with immediate effect.

And believe it or not, it can have serious repercussions in the market and cause further plump in the market of crypto which is already struggling from last 2 months.

My Thoughts on Indian Reserve Bank Limiting the future of Crypto in India

Of course, it is naive to announce the contemplation of your own digital currency and simultaneously stopping the growth of other decentralized cryptocurrencies like BTC or ETH in the India market.

But anyways, it will not stop crypto market but we can surely see some drop and loss of confidence as this news spreads like a wildfire.

This step of government will also encourage peer-to-peer cash dealings through services like LocalBitcoins but cash dealing for cryptocurrencies have already proven dangerous in India.

I think if this is acted upon seriously and if the banks totally stop servicing Indian Bitcoin exchanges then a huge black market of crypto will emerge which will be even more difficult to regulate or control.

So with this let's see how the scenario evolves in India in a few days from now but a word of caution again from CoinSutra: Never invest more than what you can afford to lose and always following the basic investing principles.

Now let me know your thoughts: So what do you think about this step of RBI? Is it good or bad? Will you buy cryptocurrencies if this happens to be true?

How are you going to buy cryptos from now? Do let us know in the comments below!!

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