A month after India’s central bank accepted that it had cracked down on cryptocurrencies without much deliberation, it has finally spelled out the reasons for its uneasiness with bitcoin and the likes. The Reserve Bank of India (RBI) is especially concerned about investor protection, the anonymity of transactions, and the cryptocurrencies’ lack of intrinsic value, it told the the Internet and Mobile Association of India (IAMAI) on July 11.
The central bank had raised these concerns earlier, too, but only now has it listed them out clearly. IAMAI, which counts bitcoin exchanges as members, had reached out to the central bank last month suggesting possible ways in which the industry can be regulated to address RBI’s concerns.
In April, the RBI had directed banks to close down all virtual money-related bank accounts by the first week of July. Stunned by the regulator’s move, some exchanges took it on legally.
The supreme court, however, told them in May to engage directly with the RBI instead. Earlier this month, the apex court refused to stay the RBI’s April order, but directed it to respond to the suggestions submitted by the exchanges.
One of the main reasons cited by the RBI for its crackdown is to protect investors and banks from frauds, said a member of the IAMAI who had a copy of the central bank’s responses. “It has said that it wants to ring-fence gullible investors and lenders from scams, several of which have happened internationally.” There has been a surge in cryptocurrency-related scams in India, too. Read more from qz.com…
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