Yesterday the Reserve Bank of India (RBI) passed a statement that in more or less words directed banks affiliated with it, to shut down all support with cryptocurrency exchanges in India.
First let’s take a look at the actual wording of the press release that RBI put out after its announcement. Titled Ring-fencing regulated entities from virtual currencies, the announcement said, “Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. 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.”
It added that the 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.
Naturally, there is some discomfort regarding this announcement. Sharan Nair, Senior Vice President at Coinswitch told Crypto-News.in, “So this is not a ban on exchanges or cryptocurrencies. It is a notice to the banks to not provide any sort of service to businesses or individuals dealing with cryptocurrencies and a period of 3 months have been provided to banks to wind up all activities with the cryptocurrency companies.”
He added, that people need to stop considering the announcement as a ban on cryptocurrency. What is actually happening is, banks have been instructed to terminate any kind of relationship with cryptocurrency exchanges in the next three months. If this comes to fruition then exchanges will go out of business because there will be no deposit or withdrawal at the exchanges. However, people can still raise their voices and put some amount of pressure on the government.
Coinsecure founder Benson Samuel said in an email to Crypto-News that the exchange is working with other industry players and with IAMAI and BACC to try and get a stay order on the decision.
He added that the userbase won’t get affected by this move but theur trade volumes could see an impact.
Zahoor Mohamed, founder of Prandex was understandably disappointed. he said, “This is very damaging news for all exchanges in India which deal in fiat.
Slowly all of them will go out of India and so is the opportunity to Innovate in this area. With policies like these, India will remain a late entrant in technology adoption which will seriously hinder the growth of future generations.”
Shubham Yadav, founder of Coindelta said, “Well RBI did not ban cryptocurrencies. It told banks (regulated entities) to stop any kind of business relation with the companies dealing in virtual currencies (VCs). There is a difference between ban and stop. Ban makes it illegal. But RBI did not say that. Stop means discouraging it’s use.”
Ajeet Khurana, Chief Executive Officer at Zebpay, and who is currently a part of Blockchain and Cryptocurrency Committee (BACC) said, “No way I am stopping. We will continue to do what is best for our customers, and what is best for our country. Am studying the present situation and will react shortly. and we will emerge stronger.”
No way I am stopping. We will continue to do what is best for our customers, and what is best for our country. Am studying the present situation and will react shortly. and we will emerge stronger.
— Ajeet Khurana (@AjeetK) April 5, 2018
Although nothing has been set in stone, common people are already looking for other ways to conduct their businesses without the aid of the government or banks. Suggestions have been ranging from buying cryptocurrencies over-the-counter to signing petitions, all suggestions are being taken into account.
Although, RBI has not banned cryptocurrencies (which it obviously can’t), it has taken away one of the pillars on which the community leaned heavily on. It is bad, but the situation is not completely hopeless.
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