Bitcoin investors, watch out for RBI’s July 5 deadline: If you have invested in Bitcoin or any other cryptocurrency, a deadline is looming on you. From July 5, the entities regulated by Reserve Bank of India (RBI), which include banks, will terminate their existing relationships with firms or individuals dealing in cryptocurrencies.
The RBI in April issued a circular giving a three-month buffer period to entities to end their business relationships. That period will end on July 5. It means the crypto exchanges will not be able to let traders liquidate crypto assets.
The Internet and Mobile Association of India (IAMAI), which represents internet firms had filed a writ petition in the Supreme Court against the RBI move to ban banks and financial institutions from providing services to any individual or business dealing in cryptocurrencies. Today, the court has refused to grant any interim relief to cryptocurrency exchanges against the RBI’s move, according to a Bloomberg report.
“If banking is something the exchanges are not allowed to do, then the solution is something that direct banking doesn’t come in,” Nischal Shetty, chief executive of WazirX, told ET. WazirX, an Indian crypto exchange, is now set to introduce P2P (peer-to-peer) trading.
Traditionally, all trade on exchanges happen through online banking channels where users can buy and trade bitcoins. The exchanges charge a transaction fee on every trade. The RBI’s April circular mandates banks against offering services to exchanges, pushing them toward a P2P exchange.
In P2P trade, the buyer and seller can deal with each other directly while the exchange acts as an escrow account that holds the cryptos during the transaction to avoid cheating.
While many day traders have cash out their investments, experienced traders remain unfazed. “We must understand that only withdrawal (of rupees) will be stopped but other functions like buy and sell/send and receive crypto in Indian exchanges will work,” said, Avinash Baboo, who has been a crypto trader for three years.
The government and the RBI have issued several warnings against dealing in cryptocurrencies including Bitcoins, the former even comparing it with a Ponzi scheme. While issuing the circular in April, the apex bank cautioned users, holders and traders of crypto currencies, including Bitcoins, regarding various risks associated in dealing with such currencies.