In response to a Supreme Court petition by the Internet and Mobile Association of India (IAMAI), the Reserve Bank of India (RBI) has conceded that Bitcoin (BTC) and crypto assets are not illegal, and it has placed no restrictions on its use by residents in India.
The news was met with support around the country; considering that citizens had stayed away from active cryptocurrency use due to the bank’s initial remarks.
While this is a welcome development and precedent, the RBI which is India’s Central Bank, maintains that commercial banks under its jurisdiction will still have to engage in certain regulations while dealing with crypto-related businesses.
As reported by the Economic Times of India, RBI says the regulations aim to protect banks and its institutions from the risk associated with trading crypto assets; such as volatility and illicit financing concerns. However, the RBI says the wider public is not restricted from trading cryptocurrencies through peer-to-peer transactions.
The RBI notice reads:
“Firstly, the RBI has not prohibited VCs (virtual currencies) in the country. The RBI has directed the entities regulated by it to not provide services to those persons or entities dealing in or settling VCs…The RBI has been able to ringfence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks.”– Reserve Bank of India
In all, despite the remarks by the India’s Central Bank, the country still ranks as one of the booming markets for bitcoin and crypto activity.
India’s Union Minister – Ravi Shakar Prasad inaugurated a centre of excellence in blockchain technology in Bengaluru.
The centre aims to provide “blockchain as a service and allow stakeholders to benefit from shared learning, experiences and resources.” It will also facilitate the deployment of large scale applications across various government departments, the minister notes.
According to Minister Prasad, India is witnessing digital transformation as most state governments are adopting technologies in their governance; with blockchain technology applications to be used in health, finance and agricultural sectors .
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See our publication on Bitcoin vs Fiat here.