After last year’s insane rally, cryptocurrency (also known as virtual currency) since the beginning of this year has been heading towards only one direction: southwards. The nosedive in its fortunes was partly triggered by clampdown that various government agencies have been imposing on the trading of cryptocurrencies.
As part of this clampdown, India’s central bank Reserve Bank of India (RBI) issued a statement on Thursday that will most certainly serve biggest ever blow to the trading of cryptocurrencies across India.
What did RBI Exactly Say?
In an official statement issued to the media, RBI said that in the wake of huge financial risks, it has been unilaterally decided that no institution coming under the supervision of RBI shall be allowed to offer any financial services related to cryptocurrencies. This new regulation will come into implementation from immediate effect.
Although circular with regard to this new regulation is yet to be issued, the bank has already given three months time for all entities to stop offering services related cryptocurrencies. Keeping in line with this time bond regulation, many top banks including ICICI, HDFC and Axis bank have already stopped offering services related to cryptocurrencies. Besides, the increasing clamp down has forced many exchanges that purely dealt in cryptocurrencies to shut down their shutters.
It must be noted that RBI’s tough stance on virtual currencies is not an abrupt one. The regulatory body issued many warnings last year, when the price of bitcoin (world’s most popular cryptocurrency) was skyrocketing northwards.
So, why all this fuss about cryptocurrencies?
The one big factor that makes bitcoin and other cryptocurrencies a huge villain is that there is huge secrecy surrounding their trading. This secrecy is result of the fact that there are still no regulatory bodies to regulate or supervise the trading of cryptocurrencies.
With complete lack of regulation, many experts have compared cryptocurrencies with Ponzi schemes and even deemed them as a notorious way to fund terrorist activities.
However, there are also other financial experts who are pushing to bring cryptocurrencies to bring under fair amount of regulation. But judging by the way things are going against cryptocurrencies, such a possibility looks almost bleak.