India's central bank, Reserve Bank of India (RBI) bans all legal financial institutions in India dealing with Bitcoin Cs. The ban was announced by RBI on Thursday (5/4/2018).
"Given the associated risks and their immediate impact, it has been decided that an entity governed by the RBI will not deal with or provide individual services or business entities serving or dealing [digital currency / cyptocurrency]," RBI said in an official statement as quoted by CNBC International.
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For formal financial institutions that already provide Bitcoin Cs services need to end the relationship within a certain time, which the bank said will be announced separately.
Cryptocurrency attracted the attention of regulators after Bitcoin prices rose from US $ 1,300 / btc to US $ 20,000 / btc last year. On Thursday the price of Bitcoin was close to US $ 6,887 / btc.
Most digital currencies, such as Bitcoin, are not supported by the central government, which means each country has different standards and regulations. Bitcoin and other cryptocurrencies are not a legitimate means of payment in India.
Before Thursday's statement, the Indian government had issued warnings about trade-related risks. Digital assets have problems with consumer protection, market integrity and money laundering, says RBI.
The government has planned to "take all measures to eliminate the use of these crypto assets in funding illegal activities or as part of the payment system," India's finance minister told lawmakers in New Delhi in February, according to a transcript by The Hindu newspaper .
The state tax department sent a notice about cryptocurrency investments to tens of thousands of citizens after a national survey showed transactions worth more than $ 3.5 billion had been done over a 17-month period.
Thursday's statement is part of an announcement on broader policy regulatory measures to strengthen financial market regulation. RBI is more open to blockchain, a technology that supports virtual currency, is said to have the potential to improve the efficiency and inclusiveness of the financial system