reserve bank of india

Reserve Bank of India Says Banks Are Authorized to Provide Accounts to Cryptocurrency Traders

The Reserve Bank of India (RBI) has recently confirmed that there is no banking ban on the cryptocurrency industry. The banking regulator was responding to a Right to Information (RTI) query.

The co-founder of Unocoin cryptocurrency exchange, B.V. Harish filed the RTI query on April 25. He asked whether the Central Bank has prohibited local banks from providing the bank accounts for crypto traders, crypto exchanges, or cryptocurrency companies. On May 22, the banking regulator replied: “As on date, no such prohibition exists.”

Crypto Businesses May Still Face Regulatory Hurdles

In March, the Supreme Court of India overturned the Central Bank’s circular that banned banks from providing services to any business or anyone dealing with cryptocurrencies. In April 2018, India’s Central Bank directed all entities regulated under it not to deal with digital currencies or provide services to facilitate any entity or person from settling or dealing with the same. The Supreme Court termed such directive as illegal. After the Supreme Court ruling, crypto exchanges started bringing bank support after about two years without it.

However, several banks are reported to still refuse opening accounts for cryptocurrency exchanges. Banks claim that they are waiting for further instructions from the Central Bank regarding cryptocurrency. In the recent past, Harish said that banks have been claiming that they need RBI circulars specifying that there are no more restrictions for them to provide bank accounts for cryptocurrency businesses.

BV Harish filed an RTI query because of concerns faced by traders who claimed that banks continued imposing restrictions on cryptocurrency trade despite recent ruling made by the Supreme Court.

Harish said: “Bankers have been saying that they need new RBI circulars mentioning that there are no more restrictions for them to provide bank accounts for crypto businesses. Now, we have received a positive response from the RBI.”

After the Supreme Court lifted the bank restriction, many crypto exchanges started seeing 10x trading volumes and a significant rise in new users. Despite the extended countrywide lockdown, the crypto industry is booming. P2P (peer-to-peer) marketplaces for Bitcoin are growing in the country, new investments are flowing in, and new cryptocurrency exchanges are launching.

Meanwhile, India’s government is reported to still hold discussion on whether to regulate cryptocurrency. But the process has been delayed because of the COVID-19 pandemic and the countrywide lockdown. In March, reports indicated that India’s government was engaging in discussions of ways to regulate cryptocurrencies with the Central Bank.

Crypto Exchanges Seek Clarity on Legal Status and Taxability from The Central Bank

Earlier this month, cryptocurrency exchanges in India were seeking tax status and regulatory clarity from the Central Bank following the Supreme Court ruling that favored the crypto industry earlier this year. Crypto firms and exchanges were seeking clarification concerning the nature of their operations. Several cryptocurrency exchanges wrote to the Central Bank to need clarification concerning their status as banks continue to deny banking services to them due to a lack of clarity from the Central Bank. They claimed that the lack of clarity on taxation has allowed banks to continue delaying services to crypto exchanges.

Moreover, the cryptocurrency exchanges demanded clarification regarding whether they are being classified as goods, commodities, currency, or services as would impact the manner in which they get taxed under the Goods and Services Tax (GST) framework. Praveenkumar Vijayakumar, the chairman and CEO of cryptocurrency exchange Belfrics Global said that if India’s crypto exchanges would pay GST on the whole transaction, then most of these platforms would not be able to survive. However, it remains to see how things would unfold in the crypto industry.

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Bitcoin and Libra’s Ultimate Underlying Value to be Determined by Central Banks, says Ex-RBI Governor

Former Indian central bank governor Raghuram Rajan said that Bitcoin and Facebook’s Libra could play a role in a world where central banks are issuing their own digital currencies.

Bitcoin has come a long way in its acceptance, with the coronavirus pandemic becoming a possible catalyst for its global adoption. Some institutional players have finally seen Bitcoin for what it’s worth, including the recent $250 million investment in Bitcoin by MicroStrategy.

Libra was introduced a year ago by Facebook and has received endless regulatory backlash due to the firm’s involvement in data privacy scandals including Cambridge Analytica. Libra was introduced as a global payment service platform, mitigating the inefficiencies of the current payment industry, and allowing billions of people to have access to financial infrastructure and payments. Facebook’s idea of Libra was for it to become a stablecoin, which would be backed by a basket of global currencies, enabling a stable value.

Although the world has not fully opened up to the idea of Bitcoin and Libra being an integral part of the future of the financial system, central banks have warmed up to creating their own digital currencies. Since the emergence of Libra, China has been developing its own central bank digital currency (CBDC), also known as the digital currency electronic payment (DCEP). The Bank of France is also experimenting with its own CBDC.

The former governor of the Reserve Bank of India said that Bitcoin and Libra could have a place when central banks also enter into the digital currency era. Rajan said in CNBC’s podcast:

“I would like to think that these private currencies are also in competition with the central bank digital currency.”

Rajan added that Bitcoin is a “speculative asset,” meaning that investors have shown interest in Bitcoin when traditional assets including bonds are less attractive. He explained:

“In that sense, Bitcoin is a little bit like gold, in fact, gold has some value because we value it for jewelry, but bitcoin you can’t even do that. Nevertheless, it has value because others think it has value.”

On the contrary, he supported Libra, saying, “On the other hand, Libra is an attempt to create a currency which is used for transacting. And that, the whole idea is not to hold it as a speculative asset which increases in value … but use it for transactions. So the ultimate underlying value is going to be from the central banks, they’re going to preserve the value, not of Libra but of what Libra can be exchanged into.”

Rajan’s comments may seem ironic for the cryptocurrency community, as the idea of Bitcoin at least, was for the redundancy of third parties including authorities.

Rajan believes that having a private digital currency that had the features of a “monopoly” would be problematic, but there will still be competing private digital currencies with different roles.

He concluded, “So the bottom line I think is different private currencies will do different things and it may be bitcoin has value going forward just as a store of value, or as a speculative asset. While Libra may be the kind of currency which is used more for transacting.”

Binance’s take on Libra

The Libra Association recently applied to the Swiss Financial Market Supervisory Authority (FINMA) for a payment system license. Binance commented that such a payment system is likely to be “systemically important.” With the addition of a payment system license, Libra would be more accessible to the public.

Binance added, “Libra’s envisioned global payment system could do to the payment industry what SpaceX did to the space industry: shake the foundations of a well-established sector with high entry barriers.

The Reserve Bank of India Has its Eyes on CBDC

The Reserve Bank of India (RBI) appears to have a bigger gameplan with respect to privately-issued cryptocurrencies in the country.

Shaktikanta Das, the governor of the Reserve Bank of India has revealed that the country is “very much in the game” in getting ready to launch its own Central Bank Digital Currency (CBDC).

The increasing rate of adoption of non-state-issued digital currencies has pinpointed as a concern for the RBI, which alleges that such virtual assets have the potential to disrupt the financial ecosystem. Das noted that the monetary authority has conveyed these concerns to the government, a move that has led to Prime Minister Narendra Modi considering the ban of cryptocurrencies in the country.

As noted by Das, the RBI has no set date for the release of the digital Rupee but confirmed that the project is receiving their full attention and the central bank is working on the technological and procedural aspects and tying up several loose ends.

India is not late to the CBDC party

While India is not the first nation on the Asian continent to confirm its research for Central Bank Digital Currency issuance, it definitely is not late to the party.

CBDCs in general are still in their earliest stage of adoption and development with just a few nations recording a significant headstart. The People’s Bank of China (PBoC) is at the forefront in a bid to roll out a digital version of its fiat currency, the Yuan. It has conducted a series of pilot tests, partnered with private companies as well as financial institutions that will serve as intermediaries in the issuance of the yet-to-be-launched digital yuan.

The road to launch a CBDC is a long one, but the desire to create a centralized digital currency to match the dominance of digital currencies like Bitcoin (BTC), Ethereum (ETH) and Tether (USDT) can inspire an unrelenting push to launch one in the near future.

India Cryptocurrency Ban Resurfaces, Traders and Miners to be Targeted This Time

The possibility of banning cryptocurrencies in India, Asia’s second-most populous nation with an enormous amount of cryptocurrency backers, has been brought up again after a senior official confirmed ongoing talks about a bill criminalizing investments in the booming asset class.

Per a Reuters report on the matter, the bill will particularly penalize digital currency miners and traders and may look to implement a 2019 recommendation of a 10-year jail term. Additional information was not provided.

India’s crypto ban news is a recurrent topic in the crypto space today. The country’s Supreme Court in March 2020 foisted the Central Banks attempt to dissolve the ban on crypto, an event that has even served to boost the growth of trading activities in the country. With the latest report of an imminent ban, however, the senior official said the discussions are in the final stages.

Disengagement Amid Bitcoin’s Bull Run To $100,000

The move by the Reserve Bank of India to ban all forms of cryptocurrency activities in the country is coming as Bitcoin has seen impressive investors and HODLers, with its journey to a $100,000 valuation, following its last burst above $61,000 over the weekend.

The Indian crypto savvy population will be given a 6-month grace period to liquidate their asset according to details of the new bill, a period after which the penalty to be made known later will be enforced.

Bitcoin holders and investors in India are however not swayed with the imminent ban, riding the bullish run alongside the market. Meanwhile, the ban is pending.

“If the ban is official we have to comply,” Naimish Sanghvi, who started betting on digital currencies in the last year, told Reuters, referring to existing concerns about a potential ban. “Until then, I’d rather stack up and run with the market than panic and sell.”

India Consults Stakeholders Related to Cryptocurrency Ban

Indian central government and its monetary authority, the Reserve Bank of India (RBI), is reportedly taking steps to analyse the clause of the previous plans to ban digital currencies in the country.

According to BloombergQuint, the central government talks to key stakeholders to review the “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”.

Under the ongoing review, the authority considers three key aspects cited by the BloombergQuint report. The first two around whether new rules can be enacted to accommodate cryptocurrencies. The authorities are trying to explore which areas or types of crypto-related activities to permit or ban entirely.

The new approach to tackling cryptocurrencies comes after several bans that have not been implemented. Meanwhile, the threat of clamping down on cryptocurrencies persists in Asia; cryptocurrency-related activities have not really toned down. Perhaps, the new approach to tack cryptocurrencies is based on the fact that the government is not oblivious to the many local crypto dependents that the ban will impact.

Recently, when the ban on crypto surfaces, the Indian Supreme Court always revert the prohibitions. The crypto regulatory terrain in India is somewhat confusing when the government recently clarified its stance about the latest ban, pointing out that old circulars been cited by financial institutions for not providing services to crypto exchanges no longer holds.

Although other nations are also notably anti-crypto, India embraces crypto with an open mind attitude than other nations do, exploring with a welcome progression for the growth of the digital currency ecosystem in the country.

However, the clause-by-clause analysis of the crypto bill and the proposal for a new one may not be ready during the upcoming Monsoon Session of the Parliament. Nevertheless, scraping the plans to ban crypto officially will mark a new paradigm shift for the growth of crypto in India and the global ecosystem at large.

Indian Government Affirms to Regulate Digital Currencies instead of Banning

Affirming the prior speculations on the concerted efforts of the Indian Parliament and government to regulate the developing world of cryptocurrencies, local news channel NDTV, citing a Cabinet note, has revealed that the proposed cryptocurrency bill has suggested regulation of private cryptocurrency rather than banning it.

The news channel drew five key assertions from the cabinet note that the government itself circulated. One of the focal assertions gleaned from the note is that cryptocurrencies are not in any way recognized as a legal tender in India, a position corroborated by earlier reports. The note also revealed that digital currencies will be regulated by the same body that is regulating cryptocurrency exchanges in the country, the Securities and Exchange Board of India (SEBI).

Against popular opinion, the Reserve Bank of India’s proposed virtual currency has not been linked with the new crypto legislation. However, this does not stop the central banks from regulating issues related to cryptocurrency. The proposed bill will have strict penalties for all those violating the exchange provisions that the penalties may involve a jail term of up to one and a half years. In addition, the regulator may also levy penalties in the range of Rs 5 crore to Rs 20 crore.

The bill will see the modifications of the Prevention of Money Laundering Act (PMLA) to accommodate those who may be using the nascent asset classes for terrorist financing or other related activities. All things being equal, these provisions will be signed into law before the end of the Parliament’s winter session.

The talk of the ban on crypto in India has long been in the pipeline. While the country has not given cryptocurrencies a straight free pass yet, the oversight the RBI is looking to introduce is sure to be welcomed by key industry stakeholders.

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The RBI will pilot retail CBDC in December

The Reserve Bank of India (RBI) is getting ready to conduct trials of the “digital rupee” at a number of different retail outlets throughout India. In the past, it has experimented with making wholesale transactions using a kind of digital money that was referred to as “central bank digital currency” (also known as the “CBDC”).

Within the next month, we ought to be able to see the debut of the pilot episode.

According to a report from the Economic Times of India, the Reserve Bank of India (RBI) is reportedly coming very close to complete the essential preparations to roll out the retail digital rupee trial.

This rivalry is being taken on by a number of India’s most prestigious banks, including the State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank, and IDFC First Bank, among others.

It would seem that at some time in the future, the scope of the pilot program will expand in order to accommodate participation from all of the commercial banks that are located around the country.

There will be between 10,000 and 50,000 customers putting the CBDC to the test in each of the areas where the participating banks have locations.

Through a combined effort on the part of the financial institutions, the PayNearby and Bankit platforms, and others, the new payment option will soon be made available to customers.

According to reports, the digital rupee will not act as a substitute for the already used mode of payment; rather, it would function in conjunction with the method. This is the expected outcome. In contrast to the original purpose of the digital rupee, which was to act as a replacement, this is not the intended purpose of the digital rupee.

On November 1, the Reserve Bank of India (RBI) began testing the digital rupee in the wholesale market as part of a series of trials.

The settlement of secondary market transactions involving government securities has been the primary use case for this specific application thus far.

Reliance Retail accept digital rupee at one store

Reliance Retail, one of the largest retail chains in India, has made an announcement stating that they have begun taking the digital rupee at one of their shop lines and have plans to roll out the implementation to all of their companies.

According to a story published by Tech Crunch, the business has said that support for central bank digital currency (CBDC) has already been pushed out at its gourmet shop line, Freshpik. Additionally, the company said that it will be increasing support for the digital rupee across all of its domains. This is a step that has the potential to speed up the adoption of CBDC inside the nation.

An official at Reliance Retail named V Subramaniam said that the company’s decision to accept the digital currency issued by the country’s central bank is in line with its mission to provide Indian customers with “the power of choice.” The CEO also emphasised the fact that the company is now able to offer customers in its shops an additional method of payment as a result of the project.

The article states that in order to roll out support for the CBDC, Reliance Retail teamed with ICICI Bank, Kotak Mahindra Bank, and the fintech business, Innoviti Technologies. Customers who choose to make their purchases with digital rupees will be given a QR code at the register to use in order to finalise their transactions.

In a note that was 51 pages long and published on October 7, the Reserve Bank of India (RBI) detailed its plans for the country’s CBDC. The nation’s central bank outlined a number of considerations, one of which was the potential for both good and negative consequences. According to the Reserve Bank of India, one of the primary goals of a CBDC is to cut down on the overhead expenses associated with cash management.

In November 2022, the Reserve Bank of India (RBI) began testing a wholesale version of the digital rupee with participating institutions and businesses. The CBDC pilot programme for retail customers was launched by the central bank on December 1, 2022, and it was limited to a restricted user group consisting of customers and merchants.

India UPI expanding services to Singapore

The Unified Payments Interface (UPI), which is India’s national payment network, is now merging with the PayNow quick payment system in Singapore in order to broaden the scope of its services beyond the boundaries of India. The service was inaugurated by Shaktikanta Das, governor of the Reserve Bank of India, and Ravi Menon, managing director of the Monetary Authority of Singapore, via the use of token transactions made possible by the connectivity between UPI and PayNow.

Through the integration of UPI and PayNow, users in both countries will have the ability to transmit money rapidly across international boundaries. It is possible to transfer or receive money from India by using merely a UPI-id, a cellphone number, or a virtual payment address for money that is housed in bank accounts or electronic wallets. The instant real-time payment method offered by UPI enables the quick transfer of funds between two bank accounts via the use of a mobile app.

At the outset, the State Bank of India, the Indian Overseas Bank, the Indian Bank, and the ICICI Bank will act as facilitators for outbound remittances. Both Axis Bank and DBS Bank India will work to make it easier to receive money sent from outside. Users in Singapore will get the service through DBS Bank and Liquid Group as the providers.

The ICICI Bank is also participating in the Central Bank Digital Currency (CBDC) scheme that is being implemented in India. The CBDC pilot program in India was first introduced in two stages: the first was in November 2022 for the wholesale sector, and the second was in December for retail consumers. Since the beginning of the pilot program, the digital rupee initiative has recorded 770,000 transactions that have been conducted by eight different banks. There are now five cities taking part in the experiment, and there is a possibility that nine other cities may join the study shortly.

“This is a significant value addition for India’s payment rails considering that there is close to 30 percent of the people in Singapore who are expatriates, and that they transfer money to India once a month or once every three months. Because of this integration, friction is eliminated, which in turn reduces processing time and costs.

The introduction of COVID-19 has contributed significantly, over the course of the previous several years, to the expansion of India’s digital payment infrastructure. However, the government is wary of cryptocurrencies and has imposed a tax of thirty percent on any earnings made from their use. This has caused big participants in the industry to leave the nation. The government, on the other hand, is eager to use blockchain technology for its CBDC program, with the expectation that current infrastructure would assist in scaling up its CBDC program.