In the first bi-monthly monetary policy press conference, Indian central bank, the Reserve Bank of India has made it clear that they do not encourage banks to do business with Crypto exchanges. With immediate effect, the RBI has asked the entities regulated by them to stop catering to businesses that deal in Crypto currencies.
The curved ball thrown to the Indian Traders hit really hard. The market is currently trading 10-20% below the International average from having a premium of 10% over the later. Several traders booked a severe loss. Some exchanges have responded to the press release and users have take to social media platforms like twitter to protest against RBI’s move. BitBns, has started a petition that has received over 5000 signatures at the time of this writing.
During the press conference, Mr. B.P. Kanungo, the deputy Governor of RBI stated that the digital tokens in form of crypto currencies can seriously undermine the AML and FIFD framework. He added that if digital tokens grow beyond a critical size it can endanger the Financial stability.
Ring Fencing the RBI regulated Entities
Mr. Kanungo then talked about ring fencing the RBI regulated Entities. Ring Fencing is a guarantee that the allocated funds will not be spent on activities other than ones promised.
The Deputy governor said,
They (RBI regulated entities) are required to stop having a business relationship with entities dealing with virtual currencies forthwith and unwind the existing relationship in a period of three months time.
You can watch the entire press conference in the below video:
Three Months to Close Existing Relationships
RBI has effectively given 3 months to Banks to close their business with cryptocurrency exchanges. This would mean that if the RBI does not amend the stand, all exchanges operating with INR fiat will have to stop using INR as the banks will cut them loose.
If you hold cryptocurrency now, do not panic sell them. There are over 40 exchanges in India. There is Blockchain and Cryptocurrency committee headed by the CEO of Zebpay Mr. Ajeet Khurana. We are positive these exchanges will come together and work with the Government to bring an amicable solution. Cryptocurrency is mainstream, whether we accept it or not. If not today, tomorrow they will be regulated and legal.
Responses From Exchanges about RBI’s Move to Stop banks from Serving Crypto Businesses
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