The Central Bank of India informally contacts banks and urges them to stop serving cryptocurrency exchanges and traders due to the explosive growth of the speculative market.
The Reserve Bank of India (RBI) is urging lenders to sever ties with cryptocurrency exchanges, Reuters reports, citing three anonymous sources. One of the bank executives contacted by the Central Bank of India said:
“The regulator has unofficially asked banks why we are doing such a business, if it is of a super-speculative nature. A lot of money flows abroad through these transactions, which is inconvenient for RBI, as it can lead to money laundering. ”
According to Reuters, thousands of new users flock to the cryptocurrency industry every day as the market continues to grow. There are over 10 million cryptocurrency investors in India, according to industry estimates.
In the last year, India has been developing regulation for the cryptocurrency industry. Last month it became known that the country’s government intends to protect investors from cryptocurrency volatility. Earlier, there were numerous rumors that India was preparing a complete ban on cryptocurrencies and fines for their use.
Private lender ICICI Bank has already asked the payment companies it works with to stop cryptocurrency-related transactions, sources say. At the same time, none of the sources wanted to disclose their names, since negotiations with RBI were conducted in private and no official order had yet been received.
“Despite the fact that the discussions are informal, this is enough. Nobody wants to go against the regulator, ”said one of the sources.
India’s central bank has frequently voiced concerns about digital currencies. RBI banned the provision of banking services to cryptocurrency firms back in early 2018. However, in March last year, after lengthy legal proceedings, the country’s Supreme Court ruled to lift the ban. Last May, the Central Bank of India clarified its attitude towards cryptocurrency companies and said that the country’s banks are not prohibited from serving them.
However, Indian exchanges are still faced with a cautious approach from banks, forcing cryptocurrency trading platforms to look for new business partners. According to sources, Axis Bank, Citibank, Kotak Mahindra Bank and others are limiting their presence in the cryptocurrency market:
“Axis Bank has taken a rather negative stance towards the cryptocurrency industry. They are referring to internal policies and risk measures, and have stopped transactions with cryptocurrency exchanges. ”
IndusInd Bank is also phasing out all cryptocurrency-related transactions, sources said.
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