Yesterday, all the alarms were activated due to a public statement of the Reserve Bank Of India of its new take and actions regarding cryptocurrencies. In this statement, the bank recommended clients and customers not to trade in cryptocurrencies and also banned institutions regulated by them (any financial institutions or banks in India) to deal in cryptocurrencies, and with institutions that use cryptocurrencies as a part of their business model. Some interpreted this as an outright ban on all cryptocurrency use inside Indian borders. But the real interpretation is more pragmatic.
Yesterday, Chandra Garg, the Indian sub-secretary of economic affairs, was asked about the said statement on a TV interview. He shed some light on the issue and stated that the Reserve Bank of India only objective was to decouple the use of cryptocurrencies from the national banking system. He also stated that cryptocurrencies were never monetized because they are not currencies, and they were mistakenly being treated like it by people.
About the state of cryptocurrencies in India, he declared that the population that holds crypto could still trade with them, deposit and transfer them to wallets and trade it in cash. The only thing is that cryptocurrencies won’t be able to get into the payment system through banks. He did not declare anything about crypto exchange owned accounts, but according to the stance, they would surely be closed. The full interview is embedded below.
The Reserve Bank of India has always had a negative stance on cryptocurrencies, issuing more than one statement advising people not to invest in cryptocurrencies and listing the risks that cryptocurrency trading had. India is considered a country highly invested in cryptocurrencies; using cryptocurrencies as a mean for sending remittances to family in India is also a common thing. The population will surely find a way of circumventing this prohibition and keep investing, sending and receiving payments in cryptocurrencies to trade it to fiat money inside the country.