According to recent reports, residents in India will no longer be able to buy cryptocurrency through their bank accounts. The new policy has been adopted by the Reserve Bank of India (RBI) and, it could have a serious impact on crypto investors and users, with sweeping changes about to happen.
The RBI announcement will stop regulated organisations – such as banks – from allowing their customers to buy cryptocurrencies and also ban them from offering services that deal with crypto. But what, exactly, does this mean for the average cryptocurrency buyer or investor, and the wider crypto market in India? Let’s take a closer look.
According to the statement by the RBI, the decision to cease the buying or trading of cryptocurrencies has been taken due to what they see as the associated risks. In short, they are taking away their protection, and traders will not be able to deposit or withdraw normal currency at cryptocurrency exchanges. This act will leave traders with only one choice – using peer-to-peer trading platforms. And this is not an insignificant amount of money. As pointed out by coincidence, services like LocalBitcoins are already accounting for more than $1 million of transactions every single week – and that will only grow from here on in.
One thing about the RBI statement that is interesting is that it points to two separate facts Firstly, that it acknowledges that there are plenty of benefits of using cryptocurrencies. But due to concerns over factors such as consumer protection, the integrity of the market, and the possibility of cryptos being involved in crime, they have decided the negatives outweigh the positives.
With cryptos trading at 90 percent less in recent months, due to banks taking it upon themselves to restrict availability, it’s not going to have much of an immediate impact. However, int he long-term, it’s clear where this will end up leading to. If e-wallets and banks regulated by the RBI are not allowed to facilitate any crypto transaction, it means people that use them will have to work out a way of paying people in cash. In short, cryptocurrencies could be going back underground.
All this aside, it’s important to remember that cryptos are not especially large in market terms in India. And this is reflected in the Bitcoin price, which only dropped by 2% after the announcement – and the likelihood is that it was for different reasons anyway. India lags well behind China, South Korea, Singapore, Japan and the United States in the market for cryptos.
However, when you bear in mind that India is also a hotbed of tech startups, it is a little troubling for Bitcoin and crypto fans, as it asks the question of how startups will be entering the Indian ICO market.
Certainly, it’s worth keeping an eye on, for anyone currently with a stake in cryptocurrencies. While the rewards for many people using BitCoin, for example, have been huge in recent years, there are plenty of investors who have lost thousands, if not millions. And while the regulation may be a little harsh, it’s the ultimate result of being an unregulated market.