India bans banks from dealing with cryptocurrencies

Indian Central bank bans citizens from buying cryptocurrency through funds in bank accounts.

Reserve bank of India Ban Cryptocurrencies

The announcement came on Thursday by the Reserve Bank of India (RBI) which prohibited all the RBI-regulated financial institutions from letting their customers buy cryptocurrencies and also banned them from “dealing with or providing services to any individuals or business entities dealing with or settling virtual currencies”. 

The statement from RBI read:

“Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in 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.”

All the entities under RBI like banks and digital wallets are prohibited to deal with individuals or businesses buying or selling cryptocurrencies. Now this obviously means users will not be able to transfer their fiat money from bank accounts to crypto-trading wallets or exchanges. They would have no choice than to use peer-to-peer trading platforms.

“A person will not be able to transfer money from his savings account to his cryptowallet” Head Financial Services, EY India, Abizer Diwanji said.

RBI has repeatedly cautioned crypto holders and businesses regarding the risks involved with digital currencies.

In its statement, RBI acknowledged the potential of blockchain technology cryptocurrencies saying that it could be very useful to the financial system but at the same time it raises a lot of red flags like illegal financial activities and disrupting of market integrity.

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

CNN reported that cryptocurrency trading volume in India has fallen drastically in the recent months by 90 percent as banks themselves had already restricted users from buying and selling cryptocurrencies using their funds in bank accounts. Though this blockade hasn’t been turned into a government policy yet, it still looks like the Indian government is trying to outlaw cryptocurrencies especially Bitcoin.

Read Also: Ripple gets rejected by Gemini and Coinbase even after offering financial incentives

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