India’s central bank is inclusively advising lenders to break links with cryptocurrency exchanges and traders as the highly volatile business booms, Three sources told Reuters amid a ruling from the Supreme Court that banks should cooperate with the industry.
The guidance comes from legislation to prohibit and penalize anyone involved with cryptocurrency in India, which will be one of the world’s largest strikes on the latest investment trend. With the world engulfed by the COVID 19 disaster, nobody was expecting such a bill will be proceeded, which adds to the frustration of investors.
In 2018, the Reserve Bank of India (RBI) prohibited banking from dealing in both bitcoin and other cryptocurrencies.
The crypto bonds opposed this diktat and the high court in India reversed the RBI interdiction in March 2020, allowing lenders to expand the banking infrastructure to it.
However, with consumers already rushing into the trendy new asset class, regulators seem to prepare for another attempt.
There are lots of potential consumers pouring up into the ecosystem currently when values are rising for large cryptocurrencies.
According to figures from industry in India, there are over 10 million crypto investors with over 100 billion rupees in total holdings (USD 1,36 billion). Which was declared in an unofficial report.
“The supervisor has informally asked us if we are working with these businesses because they are highly speculative.
A lot of money is being spent abroad through this exchange, which is noticeable and Reserve Bank of India does not like money laundering, “Stated one of the senior executive members concerning the bank.
The Reserve Bank of India did not respond to a request for comment.
According to three sources, private lender ICICI Bank has already requested payment processing providers for which it operates to suspend all crypto-related payment transfers, and other lenders are following suit.
ICICI Bank did not respond to a request for comment sent by email.
Since the talks with the financial institutions were private and no formal order had been given yet, none of the sources wished to be identified.
“Even if the meetings are unofficial, that is adequate; no one wants to show retaliation to the authority,” said another source.
The central bank has expressed its reservations about cryptocurrencies on several occasions.
RBI Governor Shaktikanta Das said earlier this year that the central bank has “serious concerns (about virtual currency) from a financial stability standpoint.”
THE CHAOS OF CRYPTOCURRENCY:
Crypto exchanges are struggling to find potential business partners as Indian banks become suspicious and concerning about the trading system.
According to reports, Axis Bank, Citibank, Kotak Mahindra Bank, and others are narrowing their commitment to the crypto sector.
They’ve halted dealings with cryptocurrency assets, alleging corporate policies and risk mitigation mechanisms “According to the CEO of a major cryptocurrency exchange with a presence in India.
According to two sources, IndusInd Bank was already in the process of ceasing all crypto-related transactions. while Axis, Kotak, and IndusInd also did not respond to an email requesting comment.