New Delhi, India. The Prices of Bitcoin have hit new lows after the Reserve Bank of India banned all its regulated financial institutions from participating in Cryptocurrency trade.
In a statement to the local and international media, BP Kanungo, the RBI deputy Governor emphasized on the disadvantages of Cryptocurrencies which he attributed to the ban. This action is related mainly to the Arun Jaitley, India’s Finance Minister’s, statement that warned Indians about Cryptocurrencies and cautioned everyone that they are neither units of value nor the legal tender.
“…Cryptocurrencies or crypto assets raise questions on money laundering, market integrity, consumer protection among others.
In this regard of the associated risks, we have decided with, immediate effect, that all RBI regulated entities shall not provide services or deal with any business or individual trading in Cryptocurrencies.”
Partly read the statement.
The ban was preceded by immediate market reactions with the Bitcoin price plunging to lows of $6800 after the ban reports emerged.
With her 1.2 billion people, India is one of the world’s largest Cryptocurrency markets accounting for at least 10% of the global Cryptocurrency market share. The RBI ban comes at a time when the Bitcoin Price was showing signs of stability after a steady decline from the highs of $21,000 in December 2017.
The event adds to a series of bans that have occurred this year starting with the Facebook ban and the Google ban to be implemented in June 2018. However, the effects of the far-reaching events on the volatility of Cryptocurrency have mostly been checked by the actions of financial and securities regulators in the European and North American markets. These regulators have been making policies to regulate the Cryptocurrency market problems that the RBI used as a basis to ban the Cryptocurrencies. Moreover, the G20 summit of Buenos Aires had authorized the commencement of inquiry studies to inform the drafting of policy measures that were to streamline Cryptocurrency markets: The G20 will receive the Cryptocurrency reports in June 2018.
Meanwhile, the RBI’s decision was criticized by market players. The critics are against the impromptu ban, which they are advising the RBI to reconsider and follow the procedures done by the Securities and Exchange Commission (SEC), USA and the AMF, France in regulating the already volatile market.
In a quick retort, CEO of India’s Bitcoin exchange WazirX, Nischal Shetty expressed dissatisfaction and wondered why the RBI could not consult them to forge a win-win strategy for all the players. He predicted that thousands of Indians’ livelihoods are at the stake, as they will be forced to trade in unprotected underground markets rife with inefficiencies and fraudsters.
Meanwhile, the former RBI Deputy Governor Gandhi has referred to the ban as an exercise in futility, which will make the already dire situation to worsen.
The RBI ban was however mixed with positive news when the RBI Deputy Governor revealed that plans are in the pipeline to introduce a national Cryptocurrency legal tender. This fiat digital currency is to be controlled by the RBI. A committee was set to research on the feasibility of the plan.