India’s Central Bank Bans All Regulated Entities from Dealing in Cryptocurrencies

In yet another hard-hitting step towards the operations of digital currency in the country, India’s central bank - The Reserve Bank on India (RBI) - has introduced a virtual ban on Bitcoin and other cryptocurrencies by asking regulated entities to cut ties with any individual or companies dealing in cryptocurrencies.

This means that going ahead one won’t be able to make any crypto purchases through banks or e-wallets. The RBI has given these regulated entities three months to cut ties with digital currency-related business and get out of dealing with them any further.

Deputy governor of RBI, B P Kanungo, in a statement said: "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.”

However, the deputy governor openly supported the Bitcoin’s underpinning Blockchain technology, a distributed public ledger that helps to further bring more transparency, accountability, security and overall inclusion within financial services.

This move comes at a time when there is the mounting pressure of regulatory bodies from around the globe as retail investors have refrained from participating in the crypto markets, to a large extent, since the start of 2018.

The RBI said that it has repeatedly warned investors and traders regarding several risks associated while dealing with digital currency assets. In one statement, the central bank said: “Virtual currencies (VCs), also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others.”

However, it has to be noted that the central bank has not given up completely on the prospects of digital currencies and if reports are to be believed, the RBI is mulling to bring the country’s own fiat-linked cryptocurrency.

During the recent briefing to the media after concluding the two-day meeting of Monetary Policy Committee, RBI’s Deputy Governor B P Kanungo said: "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.”

He further added that “These are issued by the central bank and are considered the liability of the central bank. They will be in circulation in addition to the paper currency that we have. It also holds the promise of reducing the cost of printing notes.”