India’s central bank puts a stop to cryptocurrencies
The Reserve Bank of India (RBI) has told all regulated organisations in the country that they can no longer deal with virtual currencies.
Stop that. Stop that now.
In a statement, the RBI says these kinds of currencies “raise concerns of consumer protection, market integrity and money laundering” and “in view of the associated risks, it has been decided that, with immediate effect, entities regulated by the RBI shall not deal with or provide services to any individual or business entities dealing with or settling virtual currencies”.
In the overly emotional fintech universe, this has caused quite a stir, and the RBI will be clarifying a few more points about this soon.
At a press conference, reported on by various Indian media sources, RBI deputy governor B.P. Kanungo drily discussed cryptocurrencies: “While the regulatory responses to these tokens are not uniform internationally, it is universally feared that they can adversely impact market integrity and capital controls. And if they grow beyond a critical size, they can endanger financial stability as well.”
However, blockchain did get some love. Kanungo adds that the RBI sees it as offering “potential benefits for financial inclusion and enhancing the efficiency of the financial system”.
The RBI is also looking at a fiat digital currency. In a statement, it says: “Rapid changes in the landscape of the payments industry along with factors such as emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies.”
These are early days as an inter-departmental group has been set up to do a feasibility study. The report is expected to be made public in June this year.
Almost every day, regulators around the world are getting tough (or rumoured to be doing something) on cryptocurrencies. China and South Korea are two big names that started early.
China stopped all websites related to cryptocurrency trading and initial coin offerings (ICOs), while South Korea is mulling something similar.
Staying on the theme of regulations, today (6 April) we published the news that the UK’s Financial Conduct Authority (FCA) has waded into the cryptocurrency derivatives arena with an attempt to clarify who or what needs to be authorised.
