All the banks and financial entities after tomorrow will stop operating accounts that are in any way linked to virtual currency trade. So, if you are still invested in Bitcoin or any other cryptocurrencies, it’s time to think about the options in front of you.
The Reserve Bank of India’s three-month deadline for banks and financial institutions to stop their services to virtual currency investors and crypto-exchanges ends tomorrow. What it means is that after July 5, you cannot buy or sell any of the virtual currencies such as Bitcoin, Ethereum or Ripple through normal banking channels using rupee. All the banks and financial entities after tomorrow will stop operating accounts that are in any way linked to virtual currency trade. So, if you are still invested in Bitcoin or any other cryptocurrencies, it’s time to think about the options in front of you:
1. Sell and exit
Since the banks and all other financial institutions are not going to facilitate cryptocurrency trade after July 5, there isn’t any other way — at least for now — to buy or sell virtual currencies using rupee. So if you don’t sell and exit from the investments, you might never get the return until or unless the RBI decides otherwise – which is unlikely as the central bank and the government have on multiple occasions termed it illegal with the Finance Ministry even going to the extent of calling it a ‘ponzi scheme’. India’s biggest digital currency exchange Zebpay recently asked its users to withdraw all their money before the deadline ends. In a statement issued last month, Zebpay said that it may not be able to honour people’s request after the deadline if banks discontinue the services as directed by the Reserve Bank of India.
2. Stay invested at your own risk
The investors who can run the risk of losing money can actually wait for the final decision of the Supreme Court, which is hearing a petition against the RBI circular. On Tuesday, the apex court refused to stay the central bank’s directives but agreed to hear the petition moved by the Internet and Mobile Association of India on July 20. Zebpay co-founder Sandeep Goenka on Tuesday said that he will move the Supreme Court on July 5 to get stay on RBI circular till next hearing on July 20. But till the apex court rules otherwise, the government’s stand is very clear – “Bitcoins or such cryptocurrencies are not legal tender and those indulging in such transactions are doing it at their own risk”.
3. Wait for peer-to-peer model to kick-in
Earlier it was reported that the two cryptocurrency exchanges — WazirX and Koinex Loop — are working on peer-to-peer model to facilitate virtual currency trade without using normal banking channels. These exchanges are ready to launch P2P service after July 5 – the day RBI’s deadline ends. In the P2P system, if a person is interested in selling cryptocurrency then s/he will have to inform the exchange which will lock the currency for sale. Then exchange will wait for the buyer who will have to pay the seller directly through his or her normal banking accounts. Once the seller confirms the payment to exchange, the currency platform will release the currency to the buyers. In this system, transaction will happen between buyer and seller directly with exchange being just a facilitator.
This year in April, the Central Bank had asked all the financial institutions to stop providing services to any individual or business entities dealing with virtual currencies. The move came after it was observed that the several companies had started dealing in over thousands of digital currencies which, the government and the RBI claim, had no intrinsic value – therefore leaving the investors at risk. The RBI’s move was an attempt to ring-fence regulated entities from the risks associated with cryptocurrencies.
The RBI and the Finance Ministry have in past made it clear that virtual currencies are not legal tender and such currencies have no protection. The government has not authorised any virtual currency as a medium of exchange. It has also not given license to any agency for working as exchange. In a statement issued last year in December, the Finance Ministry said: ” Virtual currencies are not backed by government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as ‘Coins’. There is however no physical attribute to these coins. Therefore, VC are neither currencies nor coins.”
Read more at: Business Today