Why is RBI fighting a losing battle against cryptocurrency?
August 27, 2018 7:16 am,
When the central bank of India(RBI) decided to outlaw by choking the main capital and preventing any transaction in the virtual currency, nevertheless Indian traders and investors are finding ways to invest in the digital market. This transaction has reached peak since central bank gave its ultimatum this week.
On April 6th, RBI issued a diktat to banks, asking them to freeze the account of cryptocurrency exchanges. They also directed the lenders to close taps for attrition between decentralized currency and customers account. RBI has not explicitly banned cryptocurrency but has just stopped the flow of cash through formal channels.
Virtual currencies were started in order to render financial orders irrelevant. Blockchain, the underlying technology uses the principle of ledgers which are decentralized and peer to peer architecture, eliminating the central authority. Cryptocurrency thus guarantees anonymity, authorities are wary of it being used as a payout in the underground economy.
The tug of war between the regulators and the virtual market investors has been mostly one-sided, with the bank imposing de-facto ban on the digital currency which has in force for months, though has been floated without any clauses.
Banks have banned rendering services such as trading, maintaining accounts, settling, clearing etc. Also, it has been instructed not to accept the virtual currency as collateral for loans etc. Also, they are worried there may be some terror links to the virtual currency and market.