Earlier this year, it was reported that South Korea was banning cryptocurrency exchanges. This news was eventually labeled as false, and journalists worldwide were left retracting their previous words. Now, it appears the same situation applies regarding information stemming from India.
Should Crypto Users in India Be Afraid?
For the past several days, sources have claimed that India was possibly in the process of banning digital currencies so it could allegedly focus on creating a national cryptocurrency for residents to use. It was believed regulators feared competition from “neighboring” virtual assets, and wanted to remove any obstacles before tackling their latest invention head-on.
Today, we know that India is not actually banning cryptocurrencies – officials are just making it “harder” to use them.
The previous idea came from a statement released by the Reserve Bank of India (RBI), who claimed it would no longer support virtual currency businesses, and it was telling other banks to do the same.
Users Are in the Clear… For Now
However, while RBI qualifies as a banking regulatory body, it does not stand as a “legislative” body. That means it can create and build regulations for organizations that fall under its control, but it cannot govern or penalize individuals or businesses outside that spectrum.
For cryptocurrencies to officially be banned in India, an order would have to come either from the country’s elected governments (state or central), or from India’s judicial branch. The RBI does not fall into either category.
The original press release that led to users’ fears explained:
“Entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time.”
Things May Still Be Difficult
The real problem is that all banks in India fall under RBI’s regulations, meaning banks will be forced to eventually cut ties with ventures dealing in cryptocurrencies. This doesn’t mean individuals or commercial enterprises cannot use digital currencies or trade them, but they cannot rely on Indian banks, and will thus have to find new ways of completing transactions.
The good news is that RBI has not set an official timeline regarding when banks need to cut relations off. For now, they still have a little time to prepare themselves, and businesses have time to figure out what organizations or platforms they need to side with if they’re going to continue their operations.
Furthermore, the Indian government has not made any official decisions regarding what it plans to do regarding cryptocurrency regulation, so users can probably ease up for the time being.
Will India eventually take a hard and permanent stance with crypto? Post your comments below.
Images via Pixabay, Live Mint