The Reserve Bank of India explained that it “ringfenced” due to various risks raised in relation to cryptocurrency. After it
In response to the petition by the Internet Mobile Association of India, the RBI said the claim that the bank had banned cryptocurrency altogether in India was different from the truth. It said it only limited the central bank from handling cryptocurrency to commercial banks.
India’s Internet Mobile Association is fighting a legal battle with India’s central bank on behalf of the companies that suffered in April 2018. Because of the central bank’s decision not to allow commercial banks to do business with cryptocurrency companies.
The Economic Times reported, the central bank’s claim in the statement.
“Firstly, the RBI has not prohibited VCs (virtual currencies) in the country. The RBI has directed the entities regulated by it to not provide services to those persons or entities dealing in or settling VCs… The RBI has been able to ringfence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks,” the affidavit said.
India’s central bank cited the possibility of breaking financial laws by handling cryptocurrency. The means by which cross-border payments can be handled anonymously (without proper identification) are immediately subject to strict control and supervision.
The impacts of India cryptocurrency ban
India’s cryptocurrency companies received a hard impact by the central bank’s order to ban cryptocurrency transactions. Popular cryptocurrency exchanges had closed as they were unable to deposit their customers’ legal currency. Exchanges, which had avoided the shutdown, have only dealt with transactions between cryptocurrency and money.
Recently, Binance, the world’s largest cryptocurrency exchange by trading volume, acquired WazirX, the Indian cryptocurrency exchange. WazirX has not handled legal currency transactions. But Binance has allowed Indian customers to buy Stable Coin Tether in rupee, a legal currency. And then use tether to trade cryptocurrency.
The legal battle between Indian cryptocurrency companies and the central bank continued to the Supreme Court, Times said. The newspaper also reported that RBI discussed with the government whether to approve but regulate or ban cryptocurrency in 2018.
The central bank suggested that the government should not ban ICOs and allow cryptocurrency funds. They also said that the government should prevent payment channels that buy cryptocurrency. And supervise them by strengthening the foreign exchange transaction law.
India is not the first country to ban cryptocurrency. Previously, China has also announced a ban on cryptocurrency. Before the president encourage its government to embrace blockchain.