India’s Banks Ban Use of Credit Cards in Trading And Tightens Cryptocurrency Regulation
A little while after Western banks restricted the utilization of credit cards in digital currency investment, banks in India have disallowed debit and credit use in digital currency purchases.
In an announcement sent to its clients acquired by Quartz, Citibank composed:
“[There have been] concerns, both globally and locally, including from the Reserve Bank of India, cautioning members of the public regarding the potential economic, financial, operational, legal, customer protection and security-related risks associated in dealing with bitcoins, cryptocurrencies and virtual currencies.”
Local banks in India are relied upon to follow the choice of the Reserve Bank of India, the nation’s central bank, in precluding the utilization of deit and credit cards in digital currency investment. On local digital currency trades, investors still can utilize traditional methods for payments, for example, bank transfers and wiring to invest into the digital currency market.
Prior this month, unverified bits of gossip and FUD around the likelihood of a digital currency exchanging ban circulated inside the Indian market. Numerous media outlets falsely revealed the condition of the Indian digital currency market, recklessly guaranteeing that digital currency exchanging will be prohibited.
Not long after gossipy tidbits began to circulate and the media started to report about the false digital currency exchanging ban, Arun Jaitley, the finance minister of India, cleared up on national TV that the government won’t ban digital currency exchanging.
The forbiddance of debit and credit card utilization on digital currency trades and marketplaces can be considered as a measure the central bank of India took to keep local investors from investing into the digital currency market with debt.
A few research papers have demonstrated that a generally huge segment of investors in specific locales that utilization credit cards to buy bitcoin and different digital currencies have a tendency to not process their credit card payment subsequent to investing in the digital currency market. Amid significant corrections or market instability, acquisition of debt to invest in the market can prompt monetary issues, particularly if investors need cash for the time being and unable to cash out or spend.
Yet, in an interview with Quartz, law firm TRA managing partner Anirudh Rastogi expressed that regardless of whether the government tries to legitimize the choice to restrict credit and debit card use in digital currency investment as risk mitigation, it is unmerited.
“Even if banks were to justify this as necessary to mitigate their risk, I would find such a view to be very conservative and unjustifiable, which leads me to think that this is arm-twisting,” said Rastogi, who oversees several cryptocurrency businesses at TRA.
The government is yet to release a statement regarding the long-term future of the Indian cryptocurrency exchange market and until then, it is not possible to speculate the regulatory trend of the Indian cryptocurrency market.