The April 6 circular by the central bank prohibits banks and financial institutions from providing any service in relation to virtual currencies such as 'cryptocurrencies'.
Here are the 5 Key points every cryptocurrency investor must know before July 06, 2018. 1) If you are an investor in cryptocurrencies, you may soon have problems in exiting positions after July 5. Zebpay, one of the biggest digital crypto-exchanges in India, has already asked its clients to withdraw their funds before the deadline expires. 2) The exchange in a circular said, “As per a recent RBI action, banks have been told to discontinue banking services to those dealing with virtual currencies. While our industry is challenging this legally, the outcome is beyond our control. Hence, if you are holding any rupees, or depositing any rupees in Zebpay, there could soon come a time when we may be not be able to honour withdrawal requests. Please continue only if you understand this risk. 3) The SC had earlier ruled that all cryptocurrency-related cases be clubbed together and fixed July 20, 2018, as the date for the hearing. But the case was brought forward as an industry body said the RBI ban is set to come into effect this week.
Users will have to either approach a local OTC market or use service of P2P exchanges, where the exchange would act as an escrow for the crypto transfer and the buyer send the INR directly to the seller. Once the payment is confirmed, the P2P exchange will transfer the crypto to the buyer. Exchanges across India wants the RBI to re-evaluate their decision and work towards stringent regulation instead of a blanket ban on the banks. The exchanges have always adhered to strict KYC and AML procedures and hope that the RBI softens its stance in this matter.
Not only banks, the RBI circular will be equally applicable to digital payments providers as well, which are also regulated by the RBI. A couple of cryptocurrency exchanges including BTCXIndia and Ethexindia halted their trading in March amongst fears of a crackdown. Source: ET