A cautionary statement by the Reserve Bank of India (RBI) published Feb 1 alerts anyone dealing with cryptocurrency to the potential “financial, operational, legal, customer protection and security related” risks stemming from such transactions. As of now, no cryptocurrency company has been licensed by India’s central bank.
The announcement comes at a time when Bitcoin is gaining popularity in India. One reason behind the surge in interest in cryptocurrencies is the government’s demonetization policy. In the light of these circumstances, India’s central bank could be taking a preventative measure in response to Bitcoin’s growing appeal.
RBI’s stance on cryptocurrencies has not changed for the past couple of years. The bank first touched upon the topic of virtual currencies in June 2013 when it issued a report on online and mobile technologies, stating that online payment options “pose challenges in the form of regulatory, legal and operational risks”.
India has approved restrictions on physical monetary transactions of more than 300,000 rupees (approximately USD 4,500) which will be enforced beginning of April.