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RBI asks banks to stop services to those dealing in virtual currencies

Mahesh Kumar Jain

The Reserve Bank today directed all regulated entities including banks not to provide services to businesses dealing in virtual currencies like bitcoins, so as to protect consumer interest and check money laundering.

In the first bi-monthly monetary policy review of 2018-19, RBI said virtual currencies (VCs) variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering.

Speaking at a press conference after the release, Deputy Governor of RBI, BP Kanungo said in the past, RBI has repeatedly cautioned users, holders and traders of VCs, including bitcoins, regarding various risks associated in dealing with such virtual currencies.

He added that now the RBI has decided to ring-fence the RBI regulated entities that they shall not deal with or provide services to any individual or business entities dealing with or settling VCs with immediate effect.

The central bank further asked entities, which are already into such services to stop providing this kind of services within three months.

Further, the RBI has directed all payment system operators to store all data within India.

In a separate statement, RBI said, in order to have unfettered access to all payment data for supervisory purposes, it has been decided that all payment system operators will ensure that data related to payment systems operated by them are stored only inside the country within a period of 6 months.

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