RBI Bans Crypto Currencies like Bitcoin

India has effectively banned cryptocurrencies like Bitcoin, with the Reserve Bank of India (RBI) prohibiting regulated entities from providing services to individuals or businesses dealing in digital currencies. Regulated entities, such as banks, have been given three months to unwind their positions with entities related to cryptocurrencies. 

Despite this move, the RBI has expressed its intention to promote the use of blockchain – a public ledger underlying bitcoin – in financial services to enhance transparency and inclusion.

This decision by the central bank follows at least three prior warnings to the public to exercise caution when dealing with cryptocurrencies. The global trend of governments intensifying scrutiny of virtual currencies, mainly due to their unregulated nature, has played a role in this move. The significant surge in bitcoin's value in 2017 raised concerns that such currencies could facilitate activities ranging from money laundering to tax evasion and fraud.

Since reaching its peak of nearly $20,000 in early December 2017, a series of regulatory measures have caused a decline in the value of bitcoin and other cryptocurrencies, with losses escalating since the beginning of 2018. China, once a major hub for cryptocurrency trading, has taken a lead in the crackdown by making them illegal. Japan and South Korea have also implemented various regulations.

Finance Minister Shri Arun Jaitley had previously stated that the Indian government does not consider cryptocurrencies as legal tender and would take measures to eliminate their use in payments. Consequently, the RBI is set to issue detailed guidelines in an upcoming circular regarding this matter.