The Reserve Bank of India, India’s central bank that decides the country’s monetary policy, has advised the lenders in the country, including banks, to review their ties with crypto exchanges.
Though there has been a lot of talk about crypto trading being banned in India, so far, the government has not taken any action and the Supreme court had also overturned a ruling by the RBI which stopped banks from providing financial services to crypto exchanges.
After this ruling, it was expected that the RBI and the government would adopt a favoured stance towards the same and the crypto exchanges had also been running their full operations with some good banking support. But it has been learn that recently, there has been a marked change in the attitude of the RBI towards cryptocurrencies.
It is learnt that the central bank has been holding informal meetings with banks where it has been stressed that they should stop providing banking services for crypto exchanges. Though there is no specific official stance regarding this, this dictat seem to be an ‘advise’ to the banks and the effects of that has already started being felt in the exchanges and the crypto community in India.
It has been noted that some of the major crypto exchanges like WazirX has had to change their banking provider over the last couple of weeks as they started having issues with the bank that they had initially tied up with. Though things were not clear at that point of time but now with this ‘advise’, it looks as if their previous provider might have pulled the plug after the central banks advisory.
This throws into turmoil the crypto industry in India as the central bank and the government are yet to come up with any specific guidelines for the same. To their support, it can be said that they were trying to lay down some policies but the flare up in the second wave of covid has shifted the focus of the govt and hence everything else has had to wait.
It can also be noted that there has been talk of the central bank coming up with a digital rupee but not much details is known about the same. The RBI, like other central banks around the world, is worried about the usage of digital currencies for cross-border payments which would not come under their view. This could lead to funding of illegal operations and tax evasion as well and hence the central bank seems to be determined to stop this flow.
The crypto community in India had been growing very strong over the last few months with the number of traders crossing 1 million in the exchanges and the exchanges also reporting 30,000-40,000 new accounts being opened every month. But with this advisory, the fate of the crypto community in India hangs in the balance.