Why banks in India are stepping back from digital currencies- Technology News, Firstpost

Why banks in India are stepping back from digital currencies- Technology News, Firstpost

May 21, 2021 0 By admin

Paytm Payments Bank Ltd no longer permits users to purchase or sell cryptocurrency assets via its platform. This was further confirmed in a tweet by WazirX, a Bitcoin and cryptocurrency exchange, which announced on Thursday that it “will not accept INR deposits to Paytm Bank account from 11.59 pm IST tonight, 20 May 2021.”

This comes after several other banks like Yes Band and ICICI Bank, also ended association with cryptocurrency exchanges (such as WazirX and BuyUCoin) earlier this week.

Paytm Payments Bank has not officially announced the end of support for cryptocurrency exchange on its platform yet. It has also not clarified the reason for its stance. We reached out to Paytm and have not yet received a response on the same.

In April 2018, the Reserve Bank of India (RBI) directed all regulated entities including banks not to provide services to businesses dealing in virtual currencies like bitcoins, so as to protect consumer interest and check money laundering. The ban led to plummeting trade volumes and exchanges shutting their businesses.

However, in March 2020, the Supreme Court quashed the RBI ban and allowed banks to handle cryptocurrency transactions from exchanges and traders.

We reached out to WazirX co-founder Siddharth Menon who explains: “Some banks are still holding on to the old circular or don’t have any idea of how crypto works. This resistance is only from their compliance team. We have been reaching out to banks and educating them; we are making progress and hope things will be more positive in the coming weeks.”

“It’s unfortunate that India being in the forefront of fintech is restricting crypto industry. WazirX is going to enable few more options to deposit starting today,” Menon added.

The Indian government is already working on the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which is believed bring a ban on all private digital currencies (cryptocurrencies) and promote regulatory framework to launch its own official Central Bank Digital Currency (CBDC) backed by the RBI. Reports suggest that the CBDC will be named Laxmi Coin.

The Bill was to be tabled in Parliament’s Budget Session, but was deferred as the government continues to talk to stakeholders in the space.

Union Finance Minister Nirmala Sitharaman had in March this year said we will not “shut off all windows” for cryptocurrency. “We will allow a certain amount of windows for people to experiment on blockchain and bitcoin,” she said.

(Also read: WazirX trading platform deals with outages as cryptocurrencies dip; opens floodgates for memes on Twitter)