Even banks do not allow your clients to buy cryptocurrencies from their own accounts.
In a bid to protect investors from vulnerability to cryptocurrencies, RBI has banned banks and payment wallets such as Paytm and Airtel Money to deal in cryptocurrencies. Simply put, your clients can no longer execute transactions in bitcoins from their savings bank account or payment wallets. This makes trading in bitcoins practically impossible.
The restriction on cryptocurrencies comes into force with immediate effect.
In a policy statement issued yesterday, RBI said, "Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system.
Virtual currencies, also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the RBI shall not deal with or provide services to any individual or business entities dealing with or settling virtual currencies."
Earlier, RBI had cautioned investors of virtual currencies about the hazards of trading in cryptocurrencies.
The ministry of finance had also cautioned investors about the risks in investing and trading in cryptocurrencies like bitcoin. Terming bitcoin investment as a Ponzi scheme, the government warned investors saying that virtual currencies are stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack which may also result in permanent loss of money.
Cryptocurrencies such as bitcoins are a virtual currency that has gained prominence. Investors can transact in this electronic currency at low cost.