India’s Central Bank Admits to Banning Crypto Accounts Without Research
In a new twist, the Reserve Bank of India (RBI) has confessed to issuing its own ban on cryptocurrency-related accounts, without taking the time to research and comprehend the way that cryptocurrencies work.
In response to a Right to Information query filed with a local attorney with the Twitter manage Blockchainlaw91, the bank disclosed its decision to prohibit cryptocurrency-related accounts from the nation has been created without due consultation or research.
On April 5, 2018, RBI printed a statement, saying that it was banning the nation’s banks from dealing with any company or”entities coping settling or with [virtual monies ].”
RBI Deputy Governor B.P. Kanungo who talked to reporters explained there has been a three-month grace period for companies providing such solutions to wind down operations.
The bank said the transfer was inspired by the requirement to safeguard Indian clients and protect against money laundering.
In 2017, ahead of the ban, the Indian government had formed a committee, which comprised the RBI, with the intent of analyzing virtual currencies and the way they work.
The committee had proposed banning cryptocurrency exchanges in the nation, however the surging price of bitcoin toward the close of the year caused a rapid reversal of the position and the introduction of a new panel to examine cryptocurrencies.
Astonishingly, in its response to Blockchainlaw91’s question, the Reserve Bank of India disclosed its decision to prohibit the bank’s actions with crypto-based companies wasn’t backed up with no individual research or study.
Petitions and Migration
The Internet and Mobile Association of India (IAMAI) — that includes Indian crypto exchange Zebpay — have filed a writ petition to overturn RBI’s ban that prohibits banks from dealing with crypto-based businesses. The case is presently at the Supreme Court with a hearing fixed for July 20.
Considering that the ban on crypto, there were claims which blockchain businesses could be forced overseas.
Joel John, a researcher in a U.K.-based blockchain firm who talked with the regional media, considers crypto businesses can easily migrate to friendlier countries to prepare new entities. He said:”Companies moving abroad is not a new trend, but the regulatory complexities faced by blockchain businesses have hastened it.”
It’s gradually becoming a pattern for governments to make spontaneous decisions on cryptocurrency without first trying to understand how it functions. Russia and Japan have every tried to bancrypto companies before finally softening their stances.