Following new regulatory measures from the Reserve Bank of India prohibiting banks from providing services to cryptocurrency businesses, some Indian banks are taking drastic measures to discourage cryptocurrency adoption, reportedly requiring customers to sign contracts stating that they will not use cryptocurrencies of any kind as part of their new terms of service agreement.
Line in The Sand
The new measures effectively force customers to choose between banks and crypto, perhaps a difficult decision for many supporters of the fledgling cryptocurrency movement. While many hope to see cryptocurrency overtake traditional banking entirely, the infrastructure to do that simply isn’t there at the moment, and actions such as these carried out by banks on a large scale only make it more difficult to foster adoption – which, of course, is likely the point.
@DesiCryptoHodlr or “Indian Crypto Girl” on Twitter posted an image of the terms and conditions required by Kotak Mahindra Bank as an example of the new, strict measures being taken against cryptocurrency users.
The bank asks users to declare that they “will not deal with any transactions related to Crypto-currency including Bitcoins,” adding that the Bank reserves the right to close their account if they should breach the agreement.
Similar warnings are displayed on the bank’s ATM screens:
Virtual currencies (VCs) are not legal tender and do not have any regulatory permission or protection in India. We request you not to make transactions involving any VCs from any of your account/s. For any such transactions, the bank shall be acting in accordance with the regulatory guidelines which include closing your account without further intimation.
The bank claims to be acting in accordance with IRB regulations, and Crypto Girl stated on Twitter that this is just one of many banks forcing their customers to swear off crypto if they want banking services. Another Twitter user @IAmCryptoLegend commented in the thread to say that that banks are implementing similar measures in neighboring Pakistan.
This was confirmed by a screenshot of a text message from Faysal Bank warning customers not to use cryptocurrencies:
Indian Banks now forcefully taking permission from us to ‘reserve right to close our account without further intimation’ if we deal in #cryptocurrency transactions
— Indian CryptoGirl (@DesiCryptoHodlr) January 9, 2019
IRB Vs Crypto
The Indian central bank has taken a stand against cryptocurrency, citing issues of security and volatility. The bank’s governor Raghuram Rajan does concede that bitcoin is “fascinating” to him, and states his belief that India and perhaps humanity, in general, will move towards a cashless society in time.
For us at the Reserve Bank, this may happen in 10 to 20 years from now. [I] think these virtual currencies will certainly get much better, much safer and over time will be the form of transaction, and that’s for sure.
While the IRB has not banned cryptocurrency outright and Indian citizens are still legally free to use cryptocurrencies if they wish, the growing trend of banks refusing services to crypto-users could put many citizens in a tight spot, forcing them to choose between the underdeveloped system of the future and the outdated system of the past.
Featured image from Shutterstock.