India Bans Banks from Processing Cryptocurrency Purchases

Rbi published this a few hours ago

“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.”

What does it mean for banks

Banks like Yes Bank and Kotak Mahindra are advancing their technology to meet global competition in blockchain. For other public sector banks (regulated by RBI) they have been given 3 months to settle the accounts but stop Cryptocurrency Purchases soon.

What does it mean for people

Just because online transfer has been disabled, it is not the end of cryptocurrency trade. You still have approximately 3 months to settle the accounts. Moreover, you can resort to un-conventional means of cryptocurrency purchases like cash, or crypto-to-crypto transactions.

Or the well known hawala scheme. This means you pay the person in ‘kind’ or non-fiat payments. This means you purchase crypto-currency from someone but instead of online transfer via banks, you can pay something else, land, gold, silver, stocks etc. You can also use State bank of Sikkim which is NOT regulated by RBI.

cryptocurrency purchases

Editorial

Recently Indian as well as global crypto market has plummeted due to serious regulatory measures taken by governments everywhere. Is this the right thing to do.
Or, are governments scared of losing control. After all, the money in the bank accounts belong to the account holders.  It is making little sense of why RBI can impose such measures. Meanwhile most advanced countries like USA, Japan, France, Germany are embracing cryptocurrency trading and blockchain technology as a whole. Banning crypto can prevent India from getting to the next technological revolution.
Now the questions arise:
  • Will the government pay for the losses to the business because of this regulation?
  • Isn’t it the fault of government that there was no clear law. Shouldn’t government pay for it’s mistakes?
  • How can government/RBI control the money that belong to a private citizen, isn’t this unlawful?
  • Given that we live in this country with limited vision: What are the alternatives for us cryptocurrency enthusiasts who still believe in this technology?
Recently we highlighted the future of blockchain and cryptocurrency for developing nations. It can revolutionize the Indian economy. But why would government want the public to rise above their means is a great question to ask?

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