This month, the Reserve Bank of India (RBI), the country’s central bank, initiated a major crackdown on the purchase and trading of cryptocurrencies such as Bitcoin in India. At their bi-monthly monetary policy press conference on April 5th, RBI Deputy Governor B.P. Kanungo decreed that all RBI regulated bodies “are required to stop having business relationships with entities dealing with virtual currencies forthwith and unwind the existing relationships in a period of three months time.”
This means that come July, India’s banks and lenders will no longer be able to transact or facilitate transactions with companies or individuals that trade in cryptocurrencies.
The motive behind the move
In his speech, Mr. Kanungo briefly outlined the reasoning behind the directive that effectively shuts down crypto trade in India, contending that virtual currencies “can seriously undermine the AML [anti-money laundering] and FATF [Financial Action Task Force] framework, adversely impact market integrity and capital control, and if they grow beyond a critical size, can endanger financial stability as well.”