India bans banks from transacting crypto, considers creating fiat digital tokens
The Reserve Bank of India will deliver a feasibility report for developing its own digital currency in June.
India’s central bank has outlawed the use of cryptocurrencies among regulated entities, effective immediately.
In a statement on developmental and regulatory policies, the Reserve Bank of India (RBI) said that regulated entities will no longer deal with or provide services to any individual or business transacting virtual currencies.
Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. However, Virtual Currencies (VCs), also variously referred to as crypto currencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others.
Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies. 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. Regulated entities which already provide such services shall exit the relationship within a specified time. A circular in this regard is being issued separately.
RBI statement on banning cryptocurrency transactions
Companies that provide crypto-related services have three months to wind up these now-illicit practices.
Although the RBI has decided to ban the use of unregulated cryptocurrencies, the central bank has been exploring the idea of introducing its own fiat digital currency, with an official progress report due in June 2018.
“While many central banks are still engaged in the debate, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency,” the RBI said in a statement.
A number of the world’s central banks, and the governments responsible for them, have called for tighter regulation of cryptocurrencies in order to prevent misuse, deter anonymous trading and boost transparency.
Southeast Asian central bank, Bank Indonesia, warned in January that virtual currencies, including bitcoin, were no longer recognized as a legitimate form of payment and forbidden for use in all financial transactions.
The following month, China’s central bank revealed plans to escalate its ban on cryptocurrency trading and initial coin offerings (ICOs) by prohibiting local access to international digital currency platforms.
There were also reports circulating last month that China’s central bank is reportedly developing its own digital currency, purportedly titled the Digital Currency for Electronic Payments (DCEP).
In February, India’s prime minister Narendra Modi asserted that disruptive technologies, such as blockchain and the Internet of Things (IoT), are developments that require “rapid adaptation” in the workplace. During a recent speech, Modi pointed out that technology is breaking down geographical limits and roadblocks.
“Technology will help us create a seamlessly integrated world. A world where geographic distance no longer remains a barrier in cultivating a better future,” Modi said. “Leveraging technology in such a holistic manner was unthinkable some years ago. We have successfully completed this life-cycle in the last three and a half years. This has been possible through a change in public behaviour and processes.”
The National Association of Software and Services Companies (NASSCOM), India’s leading IT trade association, announced a platform for skills development in eight varied technologies, including blockchain, at WCIT 2018.
NASSCOM held a blockchain masterclass in December 2017, designed to provide an introduction to the technology, its history and potential. In February, the association will host India’s first Blockchain Bootcamp.
You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.
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