RBI has taken a final call on the cryptocurrencies by issuing a circular that prohibits the dealing of cryptocurrencies in India by barring the regulated entities for providing their services to the individuals and businesses dealing with VCs on an immediate basis. For those banks and payment gateways that have already been associated with them have been given 3 months time period to cut those ties.
3-month deadline for regulated entities to cut their VC ties
Two days back, RBI took a strict stance on cryptocurrencies in its first Bi-monthly Monetary Policy Statement of 2018-19 by ordering all the regulated entities to stop providing their services to the individuals and businesses alike that deals with cryptocurrencies.
However, nothing was clear as of yet, people and businesses alike were waiting on RBI for further clarification.
Yesterday, the central bank of India took its final call on cryptocurrency by issuing a circular titled “Prohibition on dealing in Virtual Currencies” for all commercial and cooperative banks, NBFC and payment system providers.
The circular mentions the multiple warnings issued by the central bank to the people and entities dealing with cryptocurrencies in India and its associated risks.
RBI gives a detailed clarification on the activities related to virtual currencies that would be barred from services by regulated entities with immediate effect:
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.”
The central bank further reports that the regulated entities that are already providing their services to the crypto-dealers “shall exit the relationship within three months from the date of this circular.” This means anyone that individuals and businesses are given three months to settle their crypto accounts.
Crypto exchanges, wallets and dealers in doom
Before the circular has been issued, many crypto exchanges, wallets, and dealers were figuring out alternative routes to deal with the RBI ban on cryptos. Zebpay, a bitcoin and cryptocurrency exchange in India issued a notice to its customers.
However, with this recent circular by RBI, things have become extremely clear and it looks like investors have no choice but to get all of their funds removed from the crypto market within 3 months.
RBI’s decision to ban the banks and payment services to provide their services to individuals and businesses dealing with crypto has created an uproar in the Indian cryptocurrency community.
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