India has continued its bid to induce a number of regulations on cryptocurrencies, though now private lenders have also stepped up efforts to crack down on purchases using these instruments. Consequently, Citibank has joined a consortium of other banks in banning virtual currency purchases via debit and credit cards.
Broader cryptocurrency regulation is slated for the end of March 2018 in India, though domestic authorities have wasted no time in clarifying additional measures in the interim. Indian tax authorities meanwhile have been hawkishly monitoring Bitcoin transactions on suspicion of money laundering. These concerns appear to have been echoed by Citibank, amongst other lenders, as evidenced by the group’s latest actions.
In a recently released Citibank statement today to its customers, “[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.”
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The announcement, while largely soft in terms of its language from Citibank does drive home a larger point – it will be interesting to see if other lenders in the country follow suit. Indeed, in recent months, the meteoric rise of cryptocurrencies have demonstrated the volatile nature of these instruments, which many banks have been keen on distancing themselves from.
Regardless, Citibank’s ban on using cryptos through debit or credit cards will test many users’ resolve. For example, a majority of purchases in India are conducted via internet banking, not using debit or credit cards. Should this be the case, then the latest action by Citibank may not have the full effect it was intended.
Still, the measure serves as a warning shot towards cryptocurrencies, reiterating their risk to users ahead of wider regulation on cryptos. As India is responsible for a large portion of world Bitcoin transactions, estimated at nearly 10 percent, the development is particurally noteworthy for cryptos’ fortunes moving forward.
India’s Finance Ministry has made its stance perfectly known, mincing no words earlier this month regarding cryptos. The authority likened Bitcoin and other cryptos to a Ponzi scheme, “which can result in [a] sudden and prolonged crash, exposing investors, especially retail consumers, [to] losing their hard-earned money.”