Credit & CIBIL News

SBI Does Not Ban Cryptocurrency Purchases – But Offers Warning

The Complicated Relationship Between SBI and Cryptocurrency

Indians strong enough to invest in a cryptocurrency have to face endless hurdles like a Shakespearean tragedy. While the Indian media per say seems to be interested in actively killing the benefit of doubt to the currencies, the largest public sector bank , State Bank of India has cautioned investors of the potential risks and not understood issues in crypto investments. While the earlier government stance indicated a strong signal of action against the trading, SBI, whose SBI Cards & Payments Services Pvt. Ltd. is the second largest issuer of credit cards, has not banned purchase with its credit cards.  The statement detailed that “Given concerns, both globally and locally, SBI Card would like to advise you to be mindful of potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with crypto-currencies and virtual currencies.”  Still, the cards are functional for all cryptocurrency purchases as of now.

Multiple Bannings?

Interestingly, the private banks as HDFC, ICICI bank and even Citibank India banned the use of their credit and debit cards for purchase of these virtual currencies. As it announced, “…Citi India has decided to not permit usage of its credit and debit cards towards purchase or trading of such bitcoins, crypto-currencies and virtual currencies,” the message read. 

Finance Minister, Arun Jaitley clarified in the budget speech that crypto-currencies will not be regarded as legal tender in India but failed to outline any action plan for legitimate investors. The Indian government’s concern is regarding money from tax evasion finding its way into crypto-assets for either financing illegal activities or as part of the payment system.

Investors Seeking New Banks Without Uncertainty

Indian investors currently are reeling under the after effects of planned and strong raids on all cryptocurrency exchanges last year December , following the doubts that a lot of demonetized money had flown into Bitcoin in November 2016 which had taken the prices sky-rocketing during that period.

The government has since then banned formation of any companies with the name of cryptocurrency exchanges, sent tax notices to 100,000 crypto traders asking them to pay taxes on money that had been evaded from taxation in the first place. The central bank. Reserve Bank of India has promised a strong regulatory stance soon and it has urged the exchanges in India to sit up and taken various industry-wide initiatives to help the government. An industry group called as The Blockchain and Cryptocurrency Committee (BACC), with 7 cryptocurrency exchanges as members considering several initiatives, such as creating a database of crypto users and transactions, to comply with the government’s mandates. 

While onset of a regulation may seem scary, it might also bring to the fore various topics which merit discussion and debate regarding cryptocurrency investment.

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