The Reserve Bank of India (RBI) has announced that it has not barred cryptocurrencies including Bitcoin in the country but warned against the risks of trading such currencies amid lack of regulations.
The news will relieve investors who are worried about their crypto investments.
It was earlier reported that the RBI had ordered local banks not to deal with individuals and companies involved in the crypto business.
Although cryptocurrencies are not legally prohibited in the country, the central bank’s order led to collapse of several domestic crypto platforms. Some exchanges were forced to choose the peer-to-peer services such as WazirX. Meanwhile, other exchanges terminated their services, like Coindelta due to this worrying crypto climate in the country.
The RBI has made this clarification in response to the Indian court’s affidavit which was released on September 4.
“Firstly, the RBI has not prohibited VCs (virtual currencies) in the country. The RBI has directed the entities regulated by it to not provide services to those persons or entities dealing in or settling VCs,” the affidavit read.
“The RBI has been able to ringfence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks.”
The central bank recommended the enactment of regulations to manage and track crypto business in the country.