In view of the risks involved in dealing in Virtual Currencies, the Reserve Bank of India has bared all Financial Institutions regulated by it from dealing in Virtual Currencies (VCs) or providing services for facilitating any person or entity in dealing with or settling VCs.
This effective means a Ban over VCs Like Bitcoins, Ethereum, Ripple etc in India.
I had earlier warned my readers against investing in Virtual Currencies like Bitcoins.
The prohibition on dealing in virtual currencies comes vide RBI Notification No. RBI/2017- 18/154 dated 06.04.2018.
By virtue of this notification, all Commercial and Co-operative banks, Payments Banks, Small Finance Banks, NBFCs and Payment System Providers – which are under RBI Regulation are not only bared from dealing in Virtual Currencies like Bitcoins themselves but only cannot offer any services to any person or entity to facilitate them in dealing in Virtual Currencies.
Thus from the date of the notification, all financial institutions under the regulation of the Reserve Bank of India cannot:
- Deal in Virtual Currencies
- Provide services like maintaining accounts of or registering, trading, settling, clearing of Virtual Currencies.
- Provide Loans against Virtual Currencies.
- Accept Virtual Currencies as collateral for loans extended by such financial institutions
- Open accounts of exchanges dealing with VCs
- Transfer / receipt of money in accounts relating to purchase/ sale of VCs
Thus, if you are an Indian Citizen holding Virtual Currencies like Bitcoins as of the date of this writing, the last point above holds great significance for you. Since “the transfer / receipt of money in accounts relating to purchase/ sale of VCs” has been barred by the RBI, it effectively means that even if you sell your existing Virtual Currencies, you will not be able to receive the credit of the sale value to any of your bank accounts or payment wallets.
Now, don’t start panicking just yet because RBI has allowed financial institutions already providing any of the above services a three months window to withdraw such services.
Thus you have 3 months time to sell your virtual currencies and get the credit of the sale value before the money you have invested in Virtual Currencies like Bitcoin and Ethereum get lost for ever.
You can read the full text of the RBI Circular here: RBI Bars Dealing in Virtual Currencies