The central bank of India's crypto ban will fail... and they know it

30 Aug, 2018
by Will Heasman
News
The central bank of India's crypto ban will fail... and they know it

The Reserve bank of India (RBI) has divulged concerns about their crackdown on cryptocurrency.

Back in April, the RBI issued a circular to all regulated financial institutions, forbidding them from offering financial services to cryptocurrency businesses. This had an immediate and crippling effect on the industry, especially exchanges.

Now it appears the bank is regretting its choice…

Within its annual report, the bank essentially implies that the ban has backfired, stating that due to the crippling of exchanges (which operated fairly transparently) more and more crypto users are utilizing a peer to peer approach to trading, further obscuring insights into potentially fraudulent practices (let the irony soak in).

In the RBI’s own words:

“Developments on this front need to be monitored as some trading may shift from exchanges to peer-to-peer mode, which may also involve increased usage of cash. Possibilities of migration of crypto exchange houses to dark pools/cash and to offshore locations, thus raising concerns on AML/CFT and taxation issues, require close watch.”

In the same breath, the bank stated that digital ledger technology could hold “the promise of significant economic benefits in the future”.

In fact, the promise of economic benefits appeals to the RBI so much that they’ve formed a unit dedicated to researching blockchain and cryptocurrency. This is according to a source close to the bank:

“As a regulator, the RBI also has to explore new emerging areas to check what can be adopted and what cannot. A central bank has to be on top to create regulations. This new unit is on an experimental basis and will evolve as time passes.”.

All eyes are now firmly on September 11th for the final supreme court hearing on the RBI ban.

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