The Reserve Bank of India (RBI) has forbidden controlled institutions to provide individuals and companies with services related to digital currencies such as bitcoin.
“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. A circular in this regard is being issued separately,” said in a Statement on Developmental and Regulatory Policies.
The regulator gave three months to terminate the activities related to cryptocurrencies.
RBI representatives supposed that cryptocurrencies seriously undermine the anti-money-laundering standards developed by FATF, adversely affect markets, reduce the effectiveness of control over capital flows, and also are used to finance terrorism. In addition, the department is convinced that when the market achieves cryptocurrencies of “critical dimensions”, the country’s financial stability is jeopardized.
Despite the ban, the Reserve Bank of India supports the idea of issuing a state digital currency.
The same time Unocoin, India’s leading Crypto asset & Blockchain company, also commented on RBI’s press release.
“As a company, we want to clarify and assure you few things. Please note the notice issued doesn’t talk about the legality of cryptocurrencies as such and hence the legality status of Bitcoin or other crypto-currencies In India remain unchanged. This decision of RBI’s was more in line with it’s earlier statements on the risk associated with the cryptos,” they stated.
Unocoin underlining that RBI’s crypto-regulations that the Indian government “hasn’t banned crypto”.