RBI prohibits dealing with Banks, bans Bitcoin

3 months deadline

Bitcoin has been in news for a long time. Discussion at times has been in favor and the rest against the policy. Another statement, “RBI prohibits dealing with banks who provide services to any individual or business entities dealing with or settling VCs (virtual currencies)”, is in news.

RBI passed a circular on the issue.

Three-month buffer period will be given to entities to unwind their business relationships.

 

RBI PROHIBITS DEALING WITH BANKS

Earlier supporting the technology Kanungo stated, “We also recognize that the Blockchain technology or the distributed ledger technology that lies beneath the virtual currencies has potential benefits for financial inclusion and enhancing the efficiency of the financial system and we also believe that they should be encouraged to exploit beneficially for the economy.”

But recently, BP Kanungo, Deputy Governor, RBI stated, “We have decided to ring-fence the RBI regulated entities from the risk of dealing with entities associated with virtual currencies. They are required to stop having a business relationship with the entities dealing with virtual currencies forthwith and unwind the existing relationship within a period of three months.”

THE PAST

For over a year, Bitcoin has been in news along with alt currencies. Some compared Bitcoin with a Ponzi Scheme. Some enjoyed the benefits of the latest technology. In fact, the top authorities also appointed a committee to look after the pros and cons of the technology.

As a result, In February while presenting the Union Budget 2018, Finance Minister Arun Jaitley outlawed the use of cryptocurrencies in India. Furthermore, India would also explore the use of blockchain technology to add muscle to the digital economy.

But later several warnings were issued regarding the same. RBI warned users of virtual currencies including Bitcoins regarding the potential economic and financial risk associated with cryptocurrencies. Adding to the safety RBI stated No license will be forwarded to any company to operate or deal with Bitcoin or any other virtual currency.

 

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