Concerns As India Exchanges Find Ways To Beat Government Ban
Authorities in India have raised concerns over the ongoing clamp down on cryptocurrencies. The Reserve Bank of India is concerned that the crackdown may not end well.
RBI fears were made public in its yearly report published on Wednesday. In the report, the bank noted that there was need of keeping an eye on crypto trading turning blind.
The bank said there might be an increase in cash usage since some platforms may switch from exchanges to peer-to-peer mode. This mode might fuel criminal activities associated with cryptocurrencies.
Around April, RBI issued a directive to all banks calling for immediate closure of accounts associated with crypto exchanges. The directive further required banks to terminate all businesses with the platforms. The directive was supposed to be implemented within 90 days.
Following the order, many exchanges changed their operations by migrating to peer-to-peer as a way of dropping the use of banks. U the model, exchanges link the buyer with traders buying units of one crypto for another at already established rates. Already, trading firms have been exploring options of shifting base to countries friendly to cryptos.
According to the trading platforms, RBI is to blame since it did not consult widely before rolling out the ban. They argue that RBI should have studied the market and offer regulations but a total ban. Some of the exchanges claim that they strictly follow the KYC procedure at the same time, pushing for bank-based transfers.
Over the years, RBI has been opposed to cryptos in general. The bank argues that there is a need to protect clients, investors and to establish the integrity of the market. RBI reports states that cryptos come with systemic risks that might be destructive.
During the initial crypto boom, RBI argues that digital coins have no intrinsic value while at the same time not supported by assets. The Supreme Court is set to deliver a ruling on the matter in September.