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RBI directs banks to stop services to businesses dealing in virtual currencies

Apr 6, 2018 13:15 IST
RBI directs banks to stop services to businesses dealing in virtual currencies

The Reserve Bank of India (RBI) on April 5, 2018 directed all the entities regulated by it including banks to stop providing services to businesses dealing in virtual currencies such as bitcoin, in order to protect consumer interest and check money laundering.

"In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling virtual currencies," RBI said in a notification.

The central bank stated in its first bi-monthly monetary policy review of 2018-19 that though technological innovations including virtual currencies have the potential to improve the efficiency and inclusiveness of the financial system, they also raise concerns of consumer protection, market integrity and money laundering.

 

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RBI has also repeatedly cautioned users, holders and traders of VCs including bitcoins, regarding the various risks associated in dealing with such currencies.

The bank has now asked the entities that are already into such services to stop providing the services within a specified time.

Virtual currencies (VCs) are also referred to as crypto currencies and crypto assets.

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