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#RBICantStopMEBy Amit Dudani | April 24, 2018, 2:46 p.m. GMT
At first, it was social networking sites and then the financial institutions. Slowly, almost all the important market players began expressing their reluctance in working with crypto-based processes. Now, the central regulation authority – the Reserve Bank of India (RBI) recently mandated that every financial institution and the bank must put an end to any kind of association with or service assistance to individuals or businesses dealing with crypto, to eliminate cryptocurrencies from dominating the country’s investment market. This has resulted in an almost instant discontinuation of money transfer services from investor’s bank accounts to their crypto wallets.
With these announcements, India has joined the club of countries like China and Japan that are actively regulating laws and restricting any operations in the crypto market.The crypto market in India had boomed to a massive $2bn, with Bitcoin investments alone, and these announcements have adversely affected the crypto prices, dropping their value almost by 10 – 15%, which in turn has resulted in plummeting trust and interest of crypto investors.
What led the government to these strict actions:
The announcement came as a rude shock for investors, as the RBI had recently created a panel to regulate the framework for effective and legal crypto operations. Additionally, there were rumors of RBI launching its own virtual currency. One of the major factors behind this announcement is the RBI’s responsibility towards investor protection and to save the potential use of cryptocurrency in illegal operations.
Also, cryptocurrencies form the basis of highly mobile investments that usually move out of India, leaving India with no capital control that can contribute to her economic development. The use of cryptocurrencies for financing the illegal activities and in money laundering activities also motivated the regulatory authorities to take such severe action.
While the investments in cryptocurrencies were trending very recently, there were significant investments made by retail investors, some even coming in from small household savings. After this announcement, crypto exchanges are now looking for a favorable framework to operate their business.
Is this really THE END of cryptocurrency:
The RBI’s decisions to crack down on cryptocurrencies clearly signals that the regulators are eliminating them from the Indian market and its economic system. However, some crypto enthusiasts have picked up a few loopholes in the policy.
Since the RBI has prevented financial institutions and banks from participating in crypto trading, over-the-counter and cash transactions seems to be the new interests for crypto enthusiasts. The investors are now opening a whole new gateway for cryptocurrencies and looking forward to cash transactions via financial institutions or banks. Traders and investors can look forward to greater perks for these transactions, escalating the risk of black market transactions. Investors could also look for a peer-to-peer model which will eliminate the need for the unauthorized currency that will circumvent RBI’s policy. This will also explore options for investors to invest directly in the overseas crypto market.
Although there are many such channels available for investors to continue their trading in crypto, the RBI’s policy has clamped down on the cryptocurrency integration in Indian markets and it is now next to impossible to engage in such investments through established financial channels.
After this announcement, crypto enthusiasts ended in the deep end of the financial crisis pool and took to social networking sites to start a campaign against RBI’s action, hashtagging their messages with #RBICantStopMe.
Some of the industry players believe that RBI’s decision will promote hawala trading or illegal remittances and will eliminate the tax factor from bitcoin.There are a lot of alternatives to continue trading and traders will find one or the other way to deal in cryptocurrencies unless it is officially declared illegal in India.