At the commencing of the financial year 2018, RBI outlawed dealing with cybernetic currencies, both crypto assets as well as cryptocurrencies. Since such transactions raised questions about market integrity, money laundering, and consumer protection, the RBI advised users against the usage and trading of cryptocurrencies.
Then came another obstacle in the way of blockchain—the news about Zebpay. India’s first most secured and trusted cryptocurrency and bitcoin exchange shut down their service in India and moved its base to Malta. Regardless of the Government’s stand point concerning the utilization of block chain technology, the cryptocurrency souk in India has seen P2P and low transactions.
The Repercussion of The Ban
The current regulations precisely point out the fact that the veto will minimize the exposure to a cybernetic currency like Ethereum and Bitcoin, further limiting the global cryptospace growth. Despite the fact that a rapid growth is seen in the number of blockchain startups in India, the growth of cryptocurrency is infested with numerous challenges. Certain banks have forbidden their customers to use their debit or credit cards for capitalizing in cryptocurrency.
The RBI has very clearly directed financial institutions and banks to sojourn accepting the digital currency as a means of payment and also advised them to stop investing in it since the money is not private money. Thus, the regulator disallows these institutions to risk public money in the absence of appropriate laws protecting customer interests.
As per the ET news report, the Income Tax department issues around 500,000 warnings to another cryptocurrency as well as Bitcoin investors and inquired for answers to 28 questions.
Because the RBI has given orders to banks and other financial institutions to discontinue accepting the cybernetic currencies, investors are rapidly facing shortfalls in crypto-exchange business.
Basically, RBI has expressed its apprehensions over the de-centralized quality of Bitcoin thus flagging issues concerning its evaluations.
RBI had announced in August that it has formed a new unit to supervise budding technologies like AI, cryptocurrency and blockchain.
As per the updated reports, companies in the Indian cryptocurrency market have formed a new group to push against RBI’s strict guidelines.
According to the updated reports, The Internet and Mobile Association of India have now formed a new group to push against RBI’s strict guidelines.
This committee, in particular, has representatives on board from prominent companies like Zebpay, Mastercard, IBM, and Microsoft. The board has been founded to leave cryptocurrency in a positive spotlight and assist the government to redefine some protocols levied on the cryptocurrency market during the last year and this year.
The core issue is, in spite of its promises and several use cases, particularly in the finance sector which is the first sector to reap benefits from distributed ledger technologies, cryptocurrency is struggling to keep itself afloat in the Indian market.
Although the Prospect of Cryptocurrency Appears to Be Bleak, Blockchain Rests Itself At An All-Time High
Even though it is ahead of time to form an opinion on the downfall of cryptocurrency in India, the technology only will soar off after the Government’s regulatory policies and interventions are modified. Chief Digital Officer at Mahindra Finance, Tina Singh, who is currently chairing the committee underlined that blockchain is the technology of future and will guide in accountability, decentralization, and trust in business.
Surprisingly enough, RBI’s tech research unit— Institute for Development and Research in Banking Technology (IDRBT)—is also looking out for ways through which it can leverage blockchain in the Indian financial and banking sector via workshops with technology partners, regulators, academicians, and bankers.