Reserve Bank Of India (RBI) Says Investor Protection Is Main Concern For Ban
India’s central bank, also known as the Reserve Bank of India, has justified the stance it has on cryptocurrencies and the ban implemented on the market. At the same time, the central bank authority outlined key areas of concern in the crypto world.
Reserve Bank Of India Stance On Cryptocurrencies
The Reserve Bank of India (RBI), has decided to explain which are the key areas of concern around virtual currencies. The main intention behind the decision of the RBI to divulge this information is related to a representation submitted by the Internet and Mobile Association of India (IAMAI). The document is a petition against the crypto banking ban.
According to a source that had access to the document explained that the RBI is concerned about investor protection, the lack of intrinsic value of cryptos, and anonymity, something that could be related to money laundering and other criminal activities.
For Sohail merchant, CEO of the crypto exchange Pocketbits, the RBI’s response is always on the argument of ‘investor protection.’ This view is shared by Nischal Shetty, CEO of the exchange Wazirx. He explained that the arguments are related to investor protection, by he noted that this can be obtained with regulation and not with a total ban.
During the lasts months there has been an important rise in crypto-related scams and fraud schemes in India. And some local governments of the country are working in order to investigate what is going on in the country.
Which Is Their Value?
In addition to it, the central bank is also worried about the intrinsic value of the cryptocurrencies. Indeed, do they have intrinsic value or they are just speculative assets?
The RBI commented on the matter:
“VCs [virtual currencies] don’t have any intrinsic value and are not backed by any kind of assets. The price of bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices. There is a real and heightened risk of investment bubble of the type seen in ponzi schemes.”
Another key point marked by the bank is the anonymity of the cryptocurrencies. It can lead into money laundering, something that governments are trying to fight against. Exchanges argue that a adherence to know-your-customer (KYC) rules would help reduce this problem.
There are different countries that tried to regulate the crypto world. We can mention China, South Korea and Japan. In China and South Korea Initial Coin Offerings have been banned, and crypto trading activities strongly regulated.
In Japan, one of the friendliest countries for virtual currencies in the world during 2017, started to regulate the market due to the different hacks that took place during the last months. Some exchanges have been hacked, while others showed irregular activities.
What India will do in the future is yet to be seen and will be very important for the crypto community worldwide.