RBI Restricts Banks From Doing Business With Crypto Related Services

This Thursday, The Reserve Bank of India (RBI) announced that all banks and financial institutions under its supervision would be barred from dealing with cryptocurrency exchanges and other related services.

According to the official statement made by RBI, “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 [cryptocurrencies]. Regulated entities which already provide such services shall exit the relationship within a specified time.” RBI Deputy Governor BP Kanungo shined a light on the ambiguous “specified time” and stated it to be around three months.

There was always tension inside the country on whether or not the government is going to impose a ban on the digital currency. In recent month, government officials had already stated that they don’t see bitcoins as a legal tender. Also, a panel was formed last year to study potential regulations, but they are yet to release any of their findings.

However, PocketBits – a crypto exchange within the country argued that this current policy won’t have much effect, as they were already severely cut off from banking access. The exchange tweeted, “We cannot comment on the times ahead but there is no need to panic, RBI has just reiterated what they have already implemented, THERE IS NO BAN ON BITCOIN in India as of yet, there is no official stand of the government on this. […] This is just the Central Bank of India taking a stand against a technology which they are going to implement themselves in terms of a Digital Rupee.”

It is true that RBI also has plans on issuing their own digital currency as the organization sighted in the same statement made on Thursday, “Rapid changes in the landscape of the payments industry along with factors such as [the] emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies. […] 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.”

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