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RBI issues directive banning regulated enties from dealing with cryptocurrencies

The Reserve Bank of India (RBI) has directed all regulated entities including banks not to provide services to businesses dealing in virtual currencies (cryptocurrencies) like bitcoins. While the RBI has stopped short of banning cryptocurrencies entirely, this move will severely restrict consumers' ability to either purchase or sell cryptocurrencies like Bitcoins. According to the Central bank, the decision comes into effect immediately. Regulated entities which already are dealing with virtual currency shall exit the relationship within a specified time. RBI said that it will issue detailed guidelines in a separate circular soon. In a statement on various regulatory policies, the RBI conceded that "technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system." It goes on to say that cryptocurrencies "raise concerns of consumer protection, market integrity and money laundering, among others." What about those who have bought or dealt in cryptocurrencies? The RBI said it has "repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies." Banks had begun blocking cryptocurrency purchases Last month, HDFC Bank and Citi Bank had sent out notifications informing their customers that they have barred the use of their credit, debit and prepaid cards for the purchase or trade of cryptocurrencies like Bitcoins. The banks had noted that the step has been taken due to increasing global apprehensions and the RBI cautioning the public regarding the financial, legal and security-related risks associated with…

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Writes about consumer technology, social media, digital services and tech policy. Is a gadget freak, gamer and Star Wars nerd.

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