Reserve Bank of India Clarifies Why It Targeted Crypto

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Reserve Bank of India Clarifies Why It Targeted Crypto

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The Reserve Bank of India has finally clarified its position on cryptocurrencies following this year’s crypto banking ban, writes

The clarification has come due to a request by the Internet and Mobile Association of India (IAMAI) following that organization’s submission to India’s Supreme Court contesting the ban.

Apparently, the RBI’s response to the IAMAI won’t go on the public record but it has been reported that the details are primarily concerning illegal activities plus the validity of cryptocurrencies as units of value within the financial system, according to a source who claims to have seen the document.

The suggestion that the document has returned to the RBI’s original concerns regarding money laundering and investor protection has re-ignited anger and frustration among those affected by the banking ban. The central bank announced the ban in April, affecting around five million digital currency users in India.

Many exchange CEOs in India still maintain that the RBI actions were a knee-jerk reaction to a solvable problem. Nischal Shetty, Wazirx exchange chief argued, “Some of the arguments seem to be around investor protection… but investor protection comes with regulation and not a ban!”

The suggested that the response to IAMAI referred back to its original April statement regarding money laundering provoked a range of reactions from the industry including CEO of Belfrics Praveen Kumar who reportedly suggested that:

“By limiting transactions via bank accounts and allowing more cash-related transactions, RBI is allowing more people to get duped… Instead, they need to regulate the exchanges and lay down guidelines that can help prevent these frauds.”

The RBI had also condemned cryptocurrencies in December of 2017 for lacking intrinsic value and concern which was reportedly repeated in the latest response.

A recent statement by an Indian official has even suggested that the ban won’t hold. Talking to news source Quartz, a senior government official is reported to have suggested that the government is simply waiting to implement a “mechanism to be sure that the money used is not illegal money, and to track its source”, suggesting that rather than banning digital currency, the government simply wants to monitor the flow of cryptocurrency, adding that trading is “not a criminal offense”.

This stance seems to indicate that the ban on India’s exchanges dealing with financial institutions may be ready for another twist at some time in the future.


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