The Reserve Bank of India (RBI) officially banned services related to digital currencies such as Bitcoin to various financial institutions, individuals and companies.
“It was decided that RBI organizations should immediately stop providing services to any private individuals or companies dealing with cryptocurrencies. The institutions that already provide such services must stop this activity within a certain time, “the central bank said in a statement. As the newspaper notes, the regulator allocated three months to terminate the activities related to cryptocurrencies.
In the opinion of RBI representatives, cryptocurrencies seriously undermine the anti-money-laundering standards developed by FATF, affect markets, reduce the effectiveness of control over capital flows, and also are used to finance terrorism. In addition, the department is convinced that when the market achieves crypto-currency “critical dimensions”, the country’s financial stability is jeopardized.
Despite the ban, the Reserve Bank of India supports the idea of issuing a state digital currency.
“They [state digital currencies] are issued by the central bank and represent its obligations,” said Deputy Head of RBI Prasad Kanungo. – Their treatment will be an addition to paper money. This should also reduce the costs associated with printing banknotes. “
Not surprisingly, representatives of the Indian cryptocommunity were very upset by the decision of the central bank.
“I do not think that the central bank made the right decision. This will cause panic among several million people in India who already use cryptocurrencies, “said Satvik Viswanath, co-founder of the leading bitcoin-exchange of the country Unocoin. “If they want to run their own digital currencies, they do not need to prohibit what they already have.”
Co-founder of the Coindelta exchange Shubhan Yadav noted that banks, most likely, will not be able to provide loans to cryptoexchanges.
“At the same time, the ray of hope lies in the fact that a complete ban has not yet been introduced,” he added.
Finance Minister of India Arun Jeytli does not recognize bitcoin as legal tender and intends to take all necessary measures “to prevent financing of illegal activities by means of crypto-exchange payment systems”.
An Indian State – Andhra Pradesh, which is famous for its craving to expole blockchain apps, is now partnering up with a local fund company to establish a blockchain ecosystem.
It is important to mention that Andhra Pradesh state has posted on its Twitter account a brief info about signing a Memorandum of Understanding with Covalent Fund. This is a start to builcing the ecosystem as part of the souther state’s Fintech Valley Vizag initiative.
According to the post, this partnership will also result in establishing a blockchain university. It already has a $10 million initial investment.
Covalent Fund will play the keyrole in the ecosystem development. They will not only invest and help to fundraise, but also develop a blockchain stack and give access to various tech resources required.
Part of the initiative is to develop a transparent governance with the help of blockchain. The state’s aim is to integrate blockchain technology into various official businesses by next year.