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India's Central Bank ban Financial Firms from dealing with Cryptocurrencies

India's Central Bank ban Financial Firms from dealing with Cryptocurrencies

It is the end of the road - at least for now - for millions of crypto enthusiasts in the country. It does not mention that a copy of it can not be stored overseas, according to Medianama.The RBI will issue detailed instructions by next week. It is worth noting that Bitcoin investments in India are pegged at almost $2billion. The digital assets also raised flags over consumer protection, market integrity and money laundering, the bank said.

For example, peer-to-peer marketplaces like Paxful connect buyers with sellers directly, cutting out the middlemen regulated by the likes of The Reserve Bank of India.

"These are issued by the central bank and are considered the liability of the central bank", Kanungo said. "And if they grow beyond a critical size, they can endanger financial stability as well". The release which talks majorly of regulations in the financial markets briefly touches upon the aspect of virtual currencies.

Bitcoin prices denominated in Indian rupees fell 27% on Friday, trading at a steep discount to the widely quoted Coindesk price index, according to data from CryptoCompare. Before Thursday's statement, the Indian government had issued warnings about the risk associated with trading.

The Reserve Bank of India (RBI) has officially ordered all regulated entities to refrain from providing services to any and all businesses involved in the dealing of digital currencies - including, of course, Bitcoin.

"We have chose to ring-fence the RBI regulated entities from the risks of dealing with virtual currencies".

All payment system operators, including mobile wallets like will henceforth be required to store data within India to ensure safety and security of users' information, the said today. Praveen Kumar, founder of the Singapore-based crypto-currency exchange Belfrics, called it a "bad move".

The decision's effect is immediate, as all those dealing with cryptocurrencies will no longer see banks facilitate their services.

The order on Thursday is very likely to hit the business and operations of crypto-currency processors in the country, majorly ZebPay, UnoCoin, Koinex, and Coinsecure, three of the popular trading portals.

Blockchains grew in popularity in 2017, and are expected to take centrestage in the coming years. Many Indians flocked to digital currencies in response to that measure.

Is there a bigger game?

When examining both the RBI's press release banning dealing with cryptocurrencies and the Deputy Governor's statement, it isn't hard to connect the dots.

"Several central banks are debating the possibility of introducing a fiat digital currency as opposed to the private digital tokens". The operators will be given six months' time to comply with the directive of the central bank. On the fiat currency that the RBI has proposed, he said having such a currency will also reduce the cost of printing and circulating paper currency.

RBI is taking action at a time when governments globally are trying to regulate the nascent cryptocurrency industry.

RBI has even added in one of their statements that they plan to launch their own cryptocurrency.

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