RBI cracks down on digital currencies, plans own cryptocurrency

08 April, 2018, 01:04 | Author: Roderick Gutierrez
  • RBI cracks down on digital currencies plans own cryptocurrency | Video

Point number 13 in the release reads, "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".

Mumbai: The Reserve Bank on Thursday tightened the rules to discourage use of virtual currencies like Bitcoins and also announced a study to explore introduction of "fiat" digital currencies which can be issued by it.

The RBI has asked all the financial institutions who are presently providing service related to virtual currencies to wind up such services in the next three months. "The report will be submitted by end-June 2018", it added. Before Thursday's statement, the Indian government had issued warnings about the risk associated with trading. While the security features intact in the blockchain technology have been acknowledged by the Finance Minister himself, the latest mandate by the Reserve Bank of India, discouraging Indians from dealing in cryptocurrencies, is quite disheartening.

The RBI's ban on Bitcoin and cryptocurrency dealings does not mean Indians can not still get ahold of the digital currency through other means.

Bitcoin, one of the premium currency flavours, was trading at $6775 per coin, and post the RBI announcement the price was $6797.44.


There are around five million digital currency users in India.

Consequently, operating a cryptocurrency business has gotten tough as it was reported back in January that the Ministry of Corporate Affairs has stopped registering any cryptocurrency exchange.

"Several central banks are debating the possibility of introducing a fiat digital currency as opposed to the private digital tokens". "We are carefully evaluating the impact of RBI's decision and seeking legal opinion".

This, however, doesn't necessarily mean that any sort of ban on cryptocurrencies will follow.

The Unified Payments Interface (UPI) platform, which is being promoted by the government to push a digital economy in the country, is witnessing dynamic changes with the entry of players like Google Tez and WhatsApp. "By supporting blockchain and cryptocurrency, RBI could have given Indians an opportunity to be at the forefront of a global phenomenon, act ahead of time and be future-secured with our own set of digital assets". By, which would be easily stabilized, and would even red introducing a state-backed currency, RBI would be able to reduce the costs of printing paper money.

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