India's Central Bank Stays Mum on Crypto Ban Reasoning

The RBI has responded to a query about why it moved to block banks from dealing with crypto businesses earlier this year.

Jun 12, 2018 at 5:30 p.m. UTC
Updated Sep 13, 2021 at 8:03 a.m. UTC

The Reserve Bank of India (RBI) has responded to a query about why it moved to block banks from dealing with cryptocurrency businesses earlier this year – but the reply isn't very telling.

Shri Varun Sethi, who presents himself as a "blockchain lawyer," requested clarifications from RBI under the country's Right to Information Act. According to the answers provided, the decision didn't result from any kind of special research or deliberation by the regulator.

For example, officials aid "no" when asked whether the central bank had convened a commission to explore the nature and risks of blockchain tech. And while past publications from the RBI reference reports regarding the use of cryptocurrencies for illicit uses, the central bank declined to identify which ones it pointed to.

It also refused to clarify if there were any expert opinions solicited on the matter, if the RBI had collected any information on existing cryptocurrency exchanges in India and if officials made any effort to draft a framework for dealing with cryptocurrencies within the national banking system.

To all these questions, the bank replied that this information is not covered under the Right to Information Act – and as a result, it did not have to provide an answer.

The latest twist comes months after central bank officials in India said that the companies it regulates can't deal with cryptocurrencies. The controversial announcement has since sparked a number of legal challenges which have made their way to the country's Supreme Court.

RBI said at the time that "entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [cryptocurrencies]. Regulated entities which already provide such services shall exit the relationship within a specified time."

Image via Shutterstock

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