Regulated entities already supplying services to any individual or company dealing in electronic monies are given three months to exit the connection, Reserve Bank of India (RBI) Deputy Governor B.P. Kanungo told reporters in Mumbai.
“The RBI has cautioned on three or more events members of the general public and consumers of digital currency regarding risks they are exposing themselves to via those cryptocurrencies,” he said.
“We’ve now decided to fence RBI-regulated entities in the risk of handling entities associated with virtual currencies. They must stop using a business relationship with things handling virtual monies forthwith, and unwind the existing relationship in just three months”
Based on an RBI announcement, “virtual monies, also variously known as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others”.
“In light of the associated risks, it has been decided that, with immediate impact, entities governed by the RBI won’t deal with or provide services to any individual or business entities dealing with or discovering virtual monies,” it said.
Noting, but the benefits that blockchain technology, which further cryptocurrencies, can possibly cause financial inclusion and to increasing financial system efficiency, Kanungo said the central bank is exploring a “fiat digital currency”.
“Several central banks have been debating the prospect of introducing a fiat digital money as opposed to the private digital tokens. These are issued by the central bank, are considered the liability of the central bank,” he explained.
“They’ll be in flow along with the paper currency and also holds the promise of decreasing the cost of printing of notes.”
Kanungo said that an RBI inter-departmental committee has been constituted to prepare a report on the topic, to be submitted by June-end.
Last December, the government appeared an alert on cryptocurrencies, comparing them with the infamous ponzi schemes floated to mislead gullible investors.
A Finance Ministry announcement said the virtual currencies were not backed by assets, their prices are entirely a “matter of mere speculation”.
According to research agencies here, together with the demand and cost of cryptocurrencies on the rise, cybercriminals have found innovative ways to dupe those seeking to invest.
Bitcoins in India have been trading at more than Rs 10 lakh per year, while individuals are investing amounts ranging from Rs 3,000 to many lakhs of rupees.