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India’s Central Banking Authority, RBI, Instructs Banks To Stop Providing Their Service To Those Trading Cryptos

By 10.4.2018         Mail Now Send Mail   Post Comments

India is one of the biggest names in the world when it comes to the crypto-economy. The global crypto fever was visible in the Indian markets too, as Indians purchased cryptocurrencies by the millions. Now that the boom phase is gone and the markets are slumping, India continues to be a major player in the crypto-trade. However, one decision from India’s central banking authority may prove to be a death knell for the crypto-trade in India.

The Reserve Bank of India, popularly known as RBI, is the central authority in India when it comes to banking regulations. The Reserve Bank of India has now issued a directive to all banks stating that they must no longer provide their services to those individuals or organizations which are involved in the cryptocurrency trade.

This comes via RBI deputy governor B P Kanungo, who commented: "To ring fence the RBI regulated entities (banks) from the risk of dealing with entities associated with virtual currencies, they (banks) are required to stop having business relations with the entities dealing in virtual currencies forthwith. And (they are also required to) unwind the existing relation in three months."

Fiscal policies of a country and the banking regulations in a nation are critical when it comes the growth of cryptocurrencies in the country. There are a number of other factors which are responsible for the growth of a currency in a nation. Websites such as Cryptocoinjudge, can help you determine the best possible currencies to invest in by observing the charts and historic data.

India has been one such nation where the government regulations have been quite . Here’s a timeline of cryptocurrency related events in India.

- In 2013, the RBI issued their first circular talking of cryptocurrencies and their potential use to fund drug trade/money laundering.
- In early 2017, the RBI issued a second circular alerting banks of the risk.
- A third notice from the bank came in late 2017 when the crypto-fever had peaked.
- Earlier this year, the Indian Finance Minister commented that ‘Bitcoin is not a legal tender in India’ - leading to Bitcoin prices momentarily falling to $4000 on local exchanges.
- Indian Income Tax authorities started raiding offices of cryptocurrency exchanges and started sending summons to some high-value investors, questioning them about their investments.
- Indian cryptocurrency exchanges Ethex India and BTCX India shut down citing harsh government regulations
- The RBI issues latest notice stating that banks should not deal with anyone participating in crypto-trade.

Interestingly, the RBI has issued this statement to all regulated bodies and not just banks, covering mobile payment wallets as well as banks! Panic selling has begun in the Indian markets and prices on Indian cryptocurrency exchanges are lower than the global rates.

Exchanges are willing to fight back - and most exchanges have said that they will appeal against this decision of the RBI. It will be interesting to see how the cryptocurrency scenario of India looks like after the three-month period is up!

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