Reserve Bank of India Annual Report Suggests It Will Review Its Cryptocurrency Ban
Analysts and market experts believe that the Reserve Bank of India (RBI) will most likely reverse its ban on Bitcoin trading and other cryptocurrencies after recent comments in the bank's annual report.
Analysts and market experts believe that the Reserve Bank of India (RBI) will most likely reverse its ban on Bitcoin trading and other cryptocurrencies after recent comments in the bank’s annual report.
India may reverse its blanket ban
The country’s federal bank fears its recent stern policies towards cryptocurrency may be a mistake. Earlier this year, Bitcoin trading and other cryptocurrencies were banned in India, with cryptocurrency exchanges and trading sites coming under a lot of pressure.
However, things seem to be changing and the RBI is reconsidering its decision. The bank published its annual report two days ago. In the report, RBI stated that there were fears that crypto was being pushed into the shadows to the extent where authorities would struggle to keep a track of digital trade.
The bank seems to be looking at cryptocurrencies in a different light. Rather than purely ban cryptocurrencies, they are now looking to track digital trades. With digital trades now becoming a huge part of the global economy, India doesn’t want to lose focus on that.
In its report, the bank stated that developments on digital assets need to be monitored as some trading may shift from exchanges to peer-to-peer mode, which may also involve increased use of cash.
The report further stated that:
Possibilities of migration of crypto exchange houses to dark pools/cash and to offshore locations, thus raising concerns on AML/CFT (anti-money laundering/combating the financing of terrorism) and taxation issues, require close watch.
Experts believe that the government did make a mistake in clamping down on crypto and now realize that they should be embracing the technology.
Analyst Arnab Sandhu is of the view that financial regulators realized that they made a mistake and are now admitting that they have made a mistake. The next step after that would be for them to reverse their decision.
He added that the RBI has now realized that cryptocurrency and the industry surrounding it could – and should – be a huge business for a technologically-minded country like India.
Praveen Kumar, CEO of Belfrics, a Malaysia-based exchange, which hosts operations in India, meanwhile stated that the whole situation could have been avoided if the RBI had taken time to understand cryptocurrencies.
This latest development might also affect the upcoming Supreme Court hearing on September 11, 2018. The case will decide the fate of cryptos and exchanges in the country. With the RBI’s latest stand, the decision might go in the favor of lifting the ban.
RBI open to a Central Bank Digital Currency (CBDC)
The RBI has also formed an inter-departmental group that will explore the feasibility of releasing a cryptocurrency pegged to the Rupee.
The bank provided details of this in its August report. This latest development confirms earlier reports which suggested that the RBI would consider issuing a CBDC. With this, the bank is looking to reduce the costs of managing the country’s paper currency.