India introduces a ban on operations with cryptocurrencies for financial institutions

India introduces a ban on operations with cryptocurrencies for financial institutions

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The Reserve Bank of India (RBI) has forbidden controlled institutions to provide individuals and companies with services related to digital currencies such as bitcoin. This is reported by Quartz India.

“It was decided that regulated RBI organizations should immediately stop providing services to any private individuals or companies dealing with virtual currencies. The controlled institutions that already provide such services must stop this activity within a certain time, “the central bank said in a statement.

As the newspaper notes, the regulator allocated three months to terminate the activities related to cryptocurrencies.

In the opinion of RBI representatives, cryptocurrencies seriously undermine the anti-money-laundering standards developed by FATF, adversely affect markets, reduce the effectiveness of control over capital flows, and also are used to finance terrorism. In addition, the department is convinced that when the market achieves cryptocurrency “critical dimensions”, the country’s financial stability is jeopardized.

Despite the ban, the Reserve Bank of India supports the idea of ​​issuing a state digital currency.

“They [state digital currencies] are issued by the central bank and represent its obligations,” said Deputy Head of RBI Prasad Kanungo. – Their treatment will be an addition to paper money. This should also reduce the costs associated with printing banknotes. “

Not surprisingly, representatives of the Indian crypto community were very upset by the decision of the central bank.

“I do not think that the central bank made the right decision. This will cause panic among several million people in India who already use cryptocurrencies, “said Satvik Viswanath, co-founder of the leading bitcoin-exchange of the country Unocoin. “If they want to run their own digital currencies, they do not need to prohibit what they already have.”

Co-founder of the Coindelta exchange Shubhan Yadav noted that banks, most likely, will not be able to provide loans to cryptocurrency exchanges.

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