There are a lot of misconceptions regarding a recent decision by the Indian government. Various sources claim India has banned Bitcoin trading. That is not the case whatsoever. Instead, the RBI is ending its relationship between its own banks and any user or corporation dealing with cryptocurrencies.
The Current Bitcoin Situation in India
This week’s press release by the Reserve Bank of India has caused quite a stir. Depending on how one interprets the message, it seems the RBI wants to ban all Bitcoin trading. That is not the case, although their ultimatum is still rather significant. As of April 5th, the RBI has severed all ties with its own “regulated entities” and anyone dealing with cryptocurrency.
For banks servicing cryptocurrency companies, a big deadline looms overhead. All of these institutions have a maximum of three months to cease the support. If they do not adhere to this deadline, the bank in question is no longer a “partner” of the RBI. It is a fear-mongering tactic, although one that is not necessarily fatal.
According to Unocoin, there isn’t much to be worried about. There is no ban on Bitcoin and no indication the RBI deems it an illegal currency. No funds have been frozen either, and exchange users can continue to use the platform as they always have. With no banks alerting Unocoin of any impending changes, business will resume as normal until stated otherwise.
What Does it Mean for Bitcoin Trading?
That is the big question on a lot of people’s minds. Exchanges can always look outside of India for banking partners. Additionally, it remains to be seen how many exchange-serving banks will adhere to this ultimatum in the next three months. So far, it seems the damage will not be all too great. Do keep in mind this is always subject to change
As has become evident with other exchanges, there are crypto-friendly countries. Malta comes to mind, as Binance recently migrated there. There’s also Switzerland, which seems to keep an open mind toward cryptocurrencies. If push comes to shove, Indian exchanges have other options to look into. It may hinder the use of INR, albeit it is still too early to draw any conclusions in this regard.
This decision by the officials India is not entirely surprising. For several months now, the RBI has warned about the risks associated with cryptocurrencies. This latest “warning” seems to be a logical evolution of this semi-negative stance. However, the government is still working on actively regulating cryptocurrency. How that will play out in India, remains to be determined. The only thing that matters is how Bitcoin trading is not banned in the country.