The Reserve Bank of India is taking a creative approach to subvert the country’s booming cryptocurrency industry. RBI requests controlled banks to stop negotiating with crypto exchanges on an informal basis.
RBI Requests Controlled Banks to Stop Negotiating with Crypto Exchanges
After a Supreme Court ruling that banks can work with the industry, India’s central bank Reserve Bank of India (RBI) requests other banks to stop negotiating with crypto exchanges and traders as the highly volatile market booms.
“The regulator has been informally questioning us about why we are dealing with such speculative industry. This trade sends a lot of money overseas, which the RBI is concerned about because it could lead to money laundering.”
Though official figures are still unknown, India is thought to have 10 million cryptocurrency investors who have invested more than $1.36 billion. With the recent rally in digital currency values, these figures are rapidly increasing.
The emergence of cryptocurrencies has also become a source of concern for the Indian central bank and government. The Indian government is set to pass a new law banning cryptocurrencies, but the country’s harsh Covid-19 situation has cracked down on those plans.
Although the country’s Supreme Court came out in favor of Indian crypto exchanges to overturn the regulator’s previous ban on crypto exchanges receiving banking services, the RBI is now acting informally against crypto.
“It’s enough, even though the conversations are informal. No one wants to go against the regulator.”
Banks Are Abandoning Cryptocurrencies
Several top lenders are taking a pragmatic approach to block crypto-related transactions, indicating that the strategy is working. ICICI Bank, one of India’s largest private lenders, is asking payment service providers to avoid encrypting cryptocurrency transactions.
Axis Bank, Citibank, and Kotak Mahindra Bank are among the other major banks that have taken a serious approach to cryptocurrencies.
“Axis Bank has taken a decidedly anti-crypto approach. They’ve stopped transactions with crypto exchanges, citing internal policy and risk measures,” said the CEO of a major crypto exchange with operations in India.
The advice comes as India is drafting legislation to prohibit cryptocurrencies and punish anyone who trades in them, in what will be one of the world’s widest crackdowns on the new investment trend.