[2018-02-15] India’s Banks Tigthen Cryptocurrency Regulation, Prohibit Use of..

[Terraformer]

India’s Banks Tigthen Cryptocurrency Regulation, Prohibit Use of Credit Cards in Trading

Several weeks after Western banks banned the usage of credit cards in cryptocurrency investment, banks in India have prohibited debit and credit card usage in cryptocurrency purchases.

In a statement sent to its customers obtained by Quartz, Citibank wrote:

“[There have been] concerns, both globally and locally, including from the Reserve Bank of India, cautioning members of the public regarding the potential economic, financial, operational, legal, customer protection and security-related risks associated in dealing with bitcoins, cryptocurrencies and virtual currencies.”

Local Banks to Follow

Local banks in India are expected to comply with the decision of the Reserve Bank of India, the country’s central bank, in prohibiting the usage of debit and credit cards in cryptocurrency investment. On local cryptocurrency exchanges, investors still can use conventional means of payments such as bank transfers and wiring to invest in the cryptocurrency market.

Earlier this month, unconfirmed rumors and FUD around the possibility of a cryptocurrency trading ban circulated within the Indian market. Many media outlets falsely reported the state of the Indian cryptocurrency market, irresponsibly claiming that cryptocurrency trading will be banned.

Shortly after rumors started to circulate and the media began to report about the false cryptocurrency trading ban, Arun Jaitley, the finance minister of India, clarified on national television that the government will not ban cryptocurrency trading.

The prohibition of debit and credit card usage on cryptocurrency exchanges and marketplaces can be considered as a measure the central bank of India took to prevent local investors from investing in the cryptocurrency market with debt.

Several research papers have shown that a relatively large portion of investors in certain regions that use credit cards to purchase bitcoin and other cryptocurrencies tend to not process their credit card payments after investing in the cryptocurrency market. During major corrections or market instability, acquisition of debt to invest in the market can lead to financial problems, especially if investors are in need of money in the short-term and unable to cash out or spend.

But, in an interview with Quartz, law firm TRA managing partner Anirudh Rastogi stated that even if the government tries to justify the decision to prohibit credit and debit card usage in cryptocurrency investment as risk mitigation, it is unjustifiable.

“Even if banks were to justify this as necessary to mitigate their risk, I would find such a view to be very conservative and unjustifiable, which leads me to think that this is arm-twisting,” said Rastogi, who oversees several cryptocurrency businesses at TRA.

Short-Term Trend

Earlier this month, almost immediately after unverified reports about cryptocurrency trading ban in India were released, local cryptocurrency exchanges Zebpay, Coinsecure, and Unocoin, which have over a million users on their platforms, reaffirmed that the government’s stance towards the local cryptocurrency exchange market has not changed, and it remains neutral.

The government is yet to release a statement regarding the long-term future of the Indian cryptocurrency exchange market and until then, it is not possible to speculate the regulatory trend of the Indian cryptocurrency market.

https://www.ccn.com/indias-banks-tigthen-cryptocurrency-regulation-prohibit-use-credit-cards-trading/

[Legion13]

Correct me if I am wrong but no Indian exchange as the option to buy Crypto using Credit card in India. The option isn't even available in the payment gateway. Koinex had had it before but even they have removed it. Actually the banks have full right to amend this rule since its the bank giving a credit loan and they can impose such restrictions for the safety of users. If the rule was applied on the debit or your account balance then that would have been a different story.

Many people who are new to Crypto space use their Credit cards and buy Bitcoins listening to their buds as a get rich quick method. But unfortunately the markets go opposite side when you want it leaving them with debts and cursing Bitcoin and their friends.

Hope a proper rule for Crypto is implemented in India and put a full stop for all this FUD its causing.

[1Referee]

While I do find that people should be able to do with their CC whatever they think is justified, I personally don't care about banks hammering on CC crypto purchases. It's a futile attempt to slow down crypto adoption. I have never bought anything in my life with borrowed money, and never will. People who are looking to bypass this idiotic regulation, can just withdraw money from an ATM, have that money depositted on their bank account, and wire it to whatever exchange or service to buy Bitcoin with. It requires an extra step, but the end result is basically the same - you're still able to buy Bitcoin with borrowed money. The sole purpose of making people use credit is to put them into debt, so you as bank can charge exorbitant interest rates. If a bank is willing to sacrifice that extra potential income in an attempt to stop crypto adoption, you can for sure understand how afraid of crypto they are.

[BitHodler]

The sole purpose of making people use credit is to put them into debt, so you as bank can charge exorbitant interest rates. If a bank is willing to sacrifice that extra potential income in an attempt to stop crypto adoption, you can for sure understand how afraid of crypto they are.

That's it. It indeed shows how desperate and paranoid financial institutions are getting. They know that people will flip out on these institutions if they impose bans concerning their bank accounts.

If they just stick to credit, they at least make it seem like it is done to protect people (some idiots think that's the genuine reason, lol), and not actually prevent them from spending their own money on something they want.

People won't complain in this case because they can easily bypass this ridiculous measure as you pointed out. They could also just withdraw from an ATM and buy their coins from local sellers, it's no big deal for people.