EDITOR NOTE: Let’s take a moment and think about cryptocurrencies and their underlying blockchain technologies as separate and distinct things. The real “functional” value of cryptocurrency is that it can be converted into “fiat.” What is crypto without fiat? It certainly isn’t widely accepted as a medium of exchange. It certainly isn’t a reliable store of value considering its unpredictability and volatility. Banks can simply refuse to provide fiat conversions. Governments can too. So if cryptocurrency isn’t a globally recognizable “currency,” and if crypto--which came about as an alternative to monetary centralization--can’t be legitimized without the very thing it’s trying to overtake (that is, centralization), then what does that make the exchanges, like Coinbase? The answer is quite simple: crypto exchanges, virtually, are casinos, with “chips” that have been deemed an honorary “asset class.”
Cryptocurrency exchanges have been having difficulty in receiving fiat from their customers through bank transfers.
Indian banks are halting transfers to cryptocurrency-related accounts. Users are also receiving warnings that their bank accounts, which are related to cryptocurrency transactions, might be closed.
There’s been no official statement from RBI yet. It looks like banks themselves are refusing access to crypto transactions in accounts. However, it is expected that some forward-looking banks might likely offer these services soon.
Banks might likely follow the anti-crypto order.
To kick start with cryptocurrencies, it is important to have banking support. Will the cryptocurrency industry survive if the banks stop services to those who are dealing with cryptocurrency transactions? How will investors be able to buy and deposit crypto?
The Supreme Court in the past stated that banks have the right to do business with crypto firms. That Supreme Court ruling is the law of the land, and even the RBI has confirmed that crypto is not illegal. There are still some banks citing the 2018 notice, even though it has been ruled unconstitutional.
This is happening at a time when there is a high demand for cryptocurrency investing in the country, and the exchanges have been seeing a dramatic increase in volumes.
Several Indian account holders who have their accounts with exchanges like WazirX are experiencing this trouble. Paytm Payments Bank has stopped providing banking support. Cryptocurrency exchanges in India, WazirX, ZebPay, and CoinSwitch Kuber have expressed their concerns.
Industry executives are hoping to find a solution for this very soon.
Some banks are receiving inquiries calling for the details of websites and channels through which users are investing in cryptocurrencies. Several users who have transacted using cryptocurrencies are withdrawing all the money from their bank accounts. They are also refraining from withdrawing their balances from cryptocurrency exchanges, fearing inquiries and account closure threats from bankers.
Some of the banks have informally told exchanges in advance that they can’t work with them as they fear RBI’s wrath.
It just looks like the volatility of the cryptocurrency markets has attracted the attention of central bankers.
Also, Reuters earlier in the month reported that the Regulators have been informally telling financial institutions (FIs) that they should cut their relationships with cryptocurrency exchanges and crypto traders.
This signals that the country is probably crafting a law against cryptocurrencies.
Time again, China’s central bank stated that digital currencies are not real and should not be used within financial services or markets.
Original post from TheCurrencyAnalytics