As soon as cryptocurrencies surfaced, they were lapped up by people globally. Here was this unregulated virtual currency, which was helping people cash out in millions.
However, as time went by, stories of cryptocurrency firms evaporating overnight along with their investor’s money started cropping up. Resultantly, public opinion started swaying against this, and banks started issuing directives banning the practice of paying for bitcoins through their portals.
Starting today, the banks won’t allow cryptocurrency payments through their systems thanks to an RBI mandate, reports NDTV.
The Reserve Bank of India had given a deadline to banks to snap ties with entities that deal with cryptocurrencies. The circular, released on April 6th, was challenged in the Delhi High Court, which refused to grant an injunction. Even the Supreme Court declined a stay order on July 3rd. The matter is still before the Supreme Court, which will hold a hearing again on July 20th.
The authorities have always eyed cryptocurrencies and their users with suspicion. As early as December 2013, the RBI cleared its stand on cryptocurrencies, saying that there was no underlying or backing of any asset for virtual currencies. High volatility has been noted in their value in the recent past. Thus, users are exposed to potential losses on account of this volatility.
In December 2017, The Times of India noted that the IT department sent notices to 4-5 lakh high net-worth individuals who were trading cryptocurrencies.
Well, cryptocurrency exchanges saw this coming. Some, like the International Digital Asset Platform, IDAP, and BuyUCoin, have even planned to shift base abroad to circumvent the regulatory crackdown. According to retail investors, the RBI prohibition will push trading to peer-to-peer networks or social applications such as Telegram.
