CRYPTOCURRENCIES are one of the most exciting and intriguing subjects in the finance world right now – but they have failed to win over India’s central bank.
Executive director of the Reserve Bank of India (RBI) S Ganesh Kumar has signalled virtual currencies such as Bitcoin will not be allowed in the country.
“Our current position on Bitcoins is that we will not be using it for any payments and settlements,” Kumar said at a conference in Mumbai.
Despite RBI’s rejection of cryptocurrencies, the central bank seems to see significant potential for blockchain, the technology underlying cryptocurrencies.
According to Quartz India, blockchain is already being relied on by Indian banks such as ICICI Bank and Axis Bank to enable overseas transactions, international remittances and other processes.
The talk of the government curbing the use of cryptocurrencies has been circulating for months, and although an official notification of their ban is still awaited, the RBI’s rejection shows little promise for the digital currencies.
In August, a finance ministry panel reportedly recommended cryptocurrencies should be banned in the country due to their potential misuse for money laundering and fraud.
As well as this, it is said cryptocurrencies have the potential to be volatile, with the price of a Bitcoin jumping from US$700 to US$7000 in a year according to CoinDesk.
The cryptocurrency ecosystem in India is small, with Bitcoin mainly being used as an investment option.
The news of a possible ban on cryptocurrencies in India is unsurprisingly not being welcomed by players in the country’s virtual currency trade.
“We will do our best to continue with out efforts to educate the government about cryptocurrencies. It can be useful for India by turning the country into a fintech hub, to increase financial inclusion, and there are several other benefits of it,” said Sandeep Goenka, co-founder of Zebpay, a Bitcoin exchange.