The Central Bank of India Issues Cryptocurrency Ban

The India’s Reserve Bank (RBI) has banned regulated banks and its account holders from dealing in cryptocurrencies.

In recent months the growing bubble around bitcoin and other virtual currencies has unnerved a number of central banks in recent months but the RBI’s blanket ban is the furthest measure so far taken by a major regulator.

The RBI said in a statement on its website that banks or other entities regulated by RBI “shall not deal with or provide services to any individual or business entities dealing with or settling virtual currencies”. At the current moment any bank in a trading relationship using cryptocurrencies will be given three months to exit those relationships.

The ban follows three public warnings on the dangers of virutal currency dealings amid concerns around consumer protection and money laundering, according to the RBI.

The deputy governor of RBI BP Kanungo maintained, that the central bank remains committed to exploring the potential of blockchain technology as a means of increasing both financial system efficiency and inclusion.

He also floated the idea of a central bank-issued flat digital currency as a workable alternative to private digital tokens and one that would also help to reduce the cost of printing notes.

The deputy governor said that an RBI inter-departmental committe has been convened to explore the feasibility of such a project and it will submit its findings by the end of June.