BP Kanungo, the Deputy Governor of the Reserve Bank of India (RBI) just announced that entities regulated by RBI shall not deal with or provide services to any individuals or services dealing with or settling virtual cryptocurrencies. All Banks are regulated by the RBI and hence, they will not be allowed to provide their services to Cryptocurrency exchanges.
At this point, it is too early to call it a complete ban on Cryptocurrencies in India. We need to wait for further confirmation on this, since it was not discussed in detail. He also said existing entities should terminate their relationships within 3 months.
He spoke in favour of Blockchain but not Cryptocurrencies because it is not possible for them to regulate it.
Towards the end, he also mentioned that an inter-departmental committee has been formed to explore the feasibility and the desirability for a virtual currency issued and backed by the government.
Here’s everything BP Kanungo said:
“Regarding Ring-Fencing regulated entities from virtual currencies, digital tokens issued by private parties are getting international attention for quite some time, for their speculative value. Internationally, the regulatory response to these tokens are not uniform. It is universally failed that it is seriously undermine the airmail and FATF framework, adversely impact market integrity and capital controls. If they grow beyond a critical size they can financial stability as well. In the past RBI had cautioned on three occasions the members of public regarding the various risks they are undertaking by exposing themselves to cryptocurrency. Now we have decided to ring-fence the RBI regulated Entities from the risk of dealing with entities associated with dealing with virtual currencies. They are required to stop having relationship with entities dealing with virtual currencies within three months.
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