Cryptocurrency Can Improve Financial System, RBI Says

The Reserve Bank of India has acknowledged that technological innovations like cryptocurrency can improve the financial system.

According to the central banking authority, virtual currencies and digital assets have all the capabilities to make the present system more efficient and inclusive. The statement comes as the RBI asks all the Indian banks to dissociate itself from any trading related to cryptocurrencies. For some, this may be confusing because the RBI is acknowledging the potential of cryptocurrencies. On the other hand, it is apparently making it more difficult for Indian traders to deal in cryptocurrencies.

RBI Ban On Cryptocurrency

The RBI has given a three-month window to make the ban effective. This means it will come into effect in July. After that, traders won’t be able to use their fiat money to buy cryptocurrencies, as they won’t be allowed to use their bank accounts and/or e-wallets for the same.

“A person will not be able to transfer money from his savings account to his crypto wallet,” Abizer Diwanji from EY India said.

The only option left for them would be to go for multi-cryptocurrency exchange. They can use one crypto coin to buy another. For example, they can buy Bitcoins with Ripples. For that matter, they would have to depend on national multi-cryptocurrency exchange platforms.

The only thing that worries the RBI about cryptocurrencies is that the unregulated nature of it might lead to violations of consumer protection. It may also involve money laundering and challenge market integrity.

According to the Economic Times, the RBI warned banks in January itself to be more vigilant about cryptocurrency transactions. An RBI press release also indicates that cryptocurrency traders are on their own. If they still decide to trade, they will have to do it “at their own risk.”

It will be worth seeing how traders react to the so-called ban.

[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]

Sounak has years of experience in online news publication. He has previously worked for IBTimes, The Inquisitr and Free Press Journal.

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