Under the new measures, which were established by the Reserve Bank of India (RBI), the citizens of this country can no longer buy the cryptocurrency from their Bank accounts.
The new policy prohibits the regulator agencies, which are governed by RBI and their customers to conduct any transactions with cryptocurrencies. It is also prohibited to provide banking services to companies dealing with cryptocurrencies. From the statement of RBI:
«The reserve Bank has repeatedly warned all users of cryptocurrencies on the risks associated with virtual assets. Considering these risks, it was decided to prohibit institutions regulated by RBI, to provide services individuals or entities that deal with cryptocurrencies. Organizations that currently provide such services to designated persons who need to stop in the allotted time».
As a result of the ban, traders can’t Deposit or withdraw Fiat funds to cryptocurrency exchanges, forcing them to use a peer-to-peer (P2P) trading platform, such as LocalBitcoins. According to Coinbase, LocalBitcoins service turnover is about a million dollars a week.
However, the RBI recognized that the technology of the blockchain contains a lot of potential, but at the same time cryptocurrency cause a number of problems related to consumer protection, market integrity and prevention of financial crime.
«Technological innovations, including the underlying virtual currencies, can increase the efficiency of the financial system», — reported in RBI. «However, virtual currencies, also called cryptocurrencies and crypto assets, raise concerns about consumer protection, market integrity and money laundering».