The Reserve Bank of India on Thursday issued a notification prohibiting the country’s banks and financial institutions from dealing in virtual currencies, also known as cryptocurrencies, and providing services to entities dealing in them. Such services include registering cryptocurrency service providers, maintaining their accounts, sanctioning or settling loans against virtual currencies and accepting them as collateral.

The strictures came close on the heels of senior Reserve Bank officials telling the media that the central bank was looking into the possibility of introducing a virtual currency of its own. This has led to talk that the Reserve Bank is trying to clamp down on transactions through cryptocurrencies, the most popular of which is the bitcoin, by making survival difficult for entities that enable the crypto commodity ecosystem.

But experts have called it an impractical move. “It was not a practical thing to do on part of the RBI,” said Pramod Emjay, a crypto commodity consultant.

“If these companies do not get an environment conducive to growth, or even survival in this case, they will move to other countries. Several of them have already done that in the past few years.

There are hundreds of such companies across the globe today. For someone who wants to engage in cryptocurrency transactions and hence use services of the cryptocurrency companies, it does not matter which country the services come from.” Indians reportedly traded in cryptocurrencies worth around Rs 22,000 crore in the 17-month period ending December 2017, following which the Income Tax Department issued notices to more than four lakh high net-worth individuals seeking details about their sources of investment. Read more from…

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