RBI urges all banks to stop providing services to users investing in bitcoins and cryptocurrencies with immediate effect.
The war against Bitcoins has turned on its head as the Reserve Bank of India on Thursday urged all banks that are regulated by it to stop providing services to accounts that are involved with cryptocurrencies and its transactions. The move comes down hard against the regulation of Bitcoins and its alternates that aren’t governed by any form of uniform law and are accepted on a global basis.
In its first bi-monthly monetary policy, RBI has asked all banks to cut ties with any individual or businesses that deal with any form of virtual currencies and do so by stopping services to such accounts within a three-month timeline. The central bank instigated that if the sale and purchase of cryptocurrencies are not permitted through regulated banks and wallets, no one would be able to transfer money from their bank account to their virtual crypto-wallet anymore.
This isn’t the first time the central bank has been critical of cryptocurrencies. RBI had been repeatedly warning users and traders of virtual currencies including those of bitcoins to consider the several risks while dealing with cryptocurrencies. Last year, the governing entity had shown similar concerns with digital currency investors in India. The latest move comes just months after Citi Bank and HDFC announced their bid to ban the purchase of cryptocurrencies through debit and credit cards.
In an official statement, RBI said “Technological innovations, including 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.”
RBI added by stating “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”.
Meanwhile, the central bank plans to constitute an inter-departmental group that analyzes the use of digital currency in the future. This could possibly mean that RBI might be looking to launch a virtual currency of their own. While it might not be the right decision, for now, it just shows that in the future there will be an ecosystem where cryptocurrencies will be significant and maybe then the government won’t be able to ignore the same.
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