Yesterday the Reserve Bank of India barred banks and financial institutions from dealing in cryptocurrencies. In a statement, the regulator said, "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 (virtual currencies).
We have decided to ring-fence the RBI regulated entities from the risk of dealing with entities associated with virtual currencies. They are required to stop having a business relationship with the entities dealing with virtual currencies forthwith and unwind the existing relationship within a period of three months,” BP Kanungo, deputy governor, RBI, said.
Banks will not be allowed to facilitate sale or purchase of cryptocurrencies, which means crypto investors will not be able to transfer money from their bank accounts to crypto-trading wallets like Zebpay, Koinex, Unocoin, Coinsecure, and others.
This will impact nearly 50 lakh Indians who have invested in cryptocurrencies, as well as India's crypto exchanges. Bitcoin investments in India are estimated to be in region of $2billion.
A payments expert who spoke to ET Online on the condition of anonymity called the decision "confusing" - while it does not directly ban cryptocurrencies, it makes trading in them impossible.
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