RBI Clarifies Its Position Regarding Cryptocurrencies By Stating That It Cannot Be Used For Fostering Transactions

India’s Central Bank recapitulated its stand on digital currencies stating that Bitcoin cannot to be used for making payments and settlements as of now.

S Ganesh Kumar, the Executive Director of RBI stated, “Our current position on bitcoins is that we will not be using it for any payments and settlements…though the technology underlying cryptocurrencies will not end,” while answering an audience query during the FIBAC banking meet held on 6th November in Mumbai.

The banking regulator of India had revealed its plans of coming up with a fiat cryptocurrency in September, rumoured to be Luxmi Coin. However it is simply not comfortable relying on virtual currencies such as Bitcoin which operate without any central regulation and open floodgates to illegal activities like money laundering. In September, RBI Executive Director Sudarshan Sen had also mentioned that RBI is looking for fiat cryptocurrencies but not decentralized private cryptocurrencies like Bitcoin.

Fiat currency refers to the legal standing which comes subject to recognition given by central bank. RBI feels that Bitcoin is highly private in nature whereas fiat currencies can be carried along to cyber space without having to bear the weight of tossing physical notes around in one’s pocket.

The Finance Ministry has set out its roadmap for bringing regulation into cryptocurrency sphere after a parliamentary panel branded them as “susceptible to misuse” by fraudsters and terrorists for laundering money. The Central Bank had however not issued any license or given any authorization to any company or entity for dealing with similar virtual currencies or operating such schemes. Kumar also clearly pointed out that users engaging in cryptocurrency activities shall be doing the same at their own risk since the parliamentary standing committee had already warned the masses about the same.

Last Thursday, a report was published in Economic Times, in which the government committee has advised closing cryptocurrency dealers in India as the cryptocurrencies are aiding money laundering. This shocked the bitcoin enthusiasts in the country anticipating that Bitcoin Exchanges in India shall be forced to shut down.

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