Reserve Bank of India Issues Blanket Ban on Crypto, Community Responds

The Reserve Bank of India (RBI) issued a statement on April 5, regarding their regulatory policies, and includes an announcement that effective immediately banks are barred from "dealing with or providing services to any individuals or business entities dealing with or settling virtual currencies". 

Any bank or entity regulated by RBI – namely banks across the country – cannot allow customers to purchase cryptocurrencies, and any entities providing such services currently must cease within a “specified timeframe.” According to Financial Express, RBI Deputy Governor BP Kanungo told reporters that the timeframe was three months.

Kanungo and the RBI have previously been highly critical of cryptocurrencies, repeatedly issuing warnings to would-be investors interested in bitcoin and other cryptocurrencies. Despite their stance on crypto, the statement issued says that blockchain technology innovations have the potential to improve efficiency and inclusion in the financial sector.

While the news initially caused fear in the crypto community over concerns that a market as large as India being unable to invest may harm or slow growth in the market, India-based cryptocurrency exchange attempted to clear confusion via a statement they tweeted with the accompanying hashtag #HODL.

PocketBits statement says that, essentially, not much will be changing in the face of this news. PocketBits claims that banks have already withdrawn from crypto-related transactions in recent months, and that most exchanges like themselves are working through third-party payment gateways. PocketBits notes that while third-party payment gateways are working as expected currently, they may not be a long-term solution as third-parties often work through banks regulated by the RBI.

Crypto itself is not banned in India. It is only the Reserve Bank of India that has imposed bans on crypto transactions, so investors are still allowed to buy, sell, and trade cryptocurrencies in the country, so long as they have either bought in already, or find loopholes similar to what PocketBits has mentioned via third-party payment gateways.

PocketBits implies the fight is yet to be over, and that a public interest litigation has been filed with the Supreme Court by the Blockchain and Cryptocurrency Committee of India in opposition to the ban.