Till about a week ago, big-shot banks such as Lloyd bank, JP Morgan Bank and Citibank group were in the news for halting cryptocurrency purchases made with credit cards.
This week, Citi India sent a mail to its users asking them to refrain from purchasing cryptocurrency with debit cards. This latest development is an upshot of government taking steps to regulate cryptocurrencies.
The message reads as, “Given concerns, both globally and locally, including from the Reserve Bank of India, cautioning members of the public regarding the potential, economic, financial, operational, legal, customer protection and security-related risks associated in dealing with bitcoins, cryptocurrencies and virtual currencie, Citi India has decided to not permit usage of its credit and debit cards towards purchase or trading of such bitcoins, cryptocurrencies and virtual currencies.”
(A screenshot from a mailer that is being circulated on social media)
The recipient of the mail, network consultant engineer Chinmay Patil said, “This definitely hampers the ability to go through Citi bank card. However there are ways to get around this. The catch here is that cards have been blocked. The direct deposit option should still work. Which basically means that you need to deposit into Exchange’s account and then they credit the balance.
Another option is to go via payment gateways. Which costs some percentage(1%-4%) in fee. At the worst case, you need to look into changing the bank.”
During the budget session of 2018, Finance Minister Arun Jaitley had mentioned that cryptocurrencies are not legal tender. Post that, Subhash Garg, who is serving as a secretary in the department of economic affairs, had said the government will come up with proper regulatory rules on cryptocurrencies and exchanges.
Recently, Kotak Mahindra bank had also sent a similar worded mailer to its users. On the occasion, it had said, “Kotak Mahindra does not encourage its customers to use their accounts for carrying out such transactions and hence we refrain you from carrying out such related transactions.”
It had also added that if the bank witnessed any such transactions in the future, it would be constrained to close down the respective user’s account, if the RBI directs them to do so.
Interestingly not every bank feels this way. Keyur Rajput, personal banker from HDFC said, “In case of online purchase including cryptocurrencies and virtual currency, the bank does not have the authority to stop any such purchase unless the RBI expressly says so.”
Until the Reserve Bank of India and the government of India, take a strong stance, the smart thing to do is keep a close watch on the developments. The only mention of bitcoin one sees is when the RBI in a statement said, “India being a more conservative market where cash transactions still dominate, usage of digital financial currency such as ‘bitcoin’ has not seen much traction when compared to international markets. There are, however, a few bitcoin exchange startups present in India – Unocoin, Coinsecure, and Zebpay.”
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