India’s largest private sector bank ICICI Bank has issued a warning to its remittance customers to steer away from the use of Bitcoin. The bank’s move comes after a series of warnings issued by the Reserve Bank of India, and government agencies, about the risks involved in using Bitcoin in India.
India’s financial institutions have been reluctant to embrace the technology which has seen rapid acceptance across the world. Their concerns appear to be based on the fact that the Bitcoin network has been subjected to a number of hacking attacks, which have resulted in huge losses for investors in the virtual currency.
India’s stance on the adoption of crypto currency has been a grey area since the advent of bitcoin (BTC). In what appears to be another blow to India’s cryptocurrency community, one of the largest financial service providers, ICICI Bank, has warned users against using its money transfer services to transfer any form of cryptocurrency or digital currency.
In the latest iteration of the ICICI form for outgoing money transfers for retail customers, the bank has made it clear that it intends to ban users from using the service for cryptocurrency transfers. This statement is based on the Foreign Exchange Management Act (FEMA) of 1999:
The above money transfer is NOT for investing/buying bitcoin/cryptocurrencies/virtual currencies (such as Ethereum, Ripple, Litecoin, Dash, Peercoin, Dogecoin, Primecoin, Chinacoin, Ven, Bitcoin or any other virtual currency/cryptocurrency/bitcoin).
The major banking institution communicated two other points that confirm its anti position. It also warns users not to use its money transfer service to invest in companies that trade in bitcoin or other crypto and digital currencies.
Users have also been warned not to send money that may have been obtained through crypto investments in the past. However, the Indian government has so far shown no resistance to blockchain-based financial applications.
ICICI’s decision to use FEMA 1999 against cryptocurrency adoption is in line with other banking players in the country since the Reserve Bank of India (RBI) announced a ban on banks doing business with cryptocurrency companies in April 2018.
Related: India’s Supreme Court rejects RBI’s ban on banks providing services to cryptocurrency companies.
In contrast to ICICI’s recent decision to ignore crypto-enthusiasts, the Supreme Court of India has overturned the RBI’s ban on crypto-friendly banks. Due to this confusion, Indian cryptocurrency investors continue to find loopholes to increase their portfolio of cryptocurrencies.
While government officials continue to postpone the inevitable deadline, the apparent lack of clarity on cryptocurrency investment regulations is having a direct impact on investors and fintech innovation in the country.
On the other end of the spectrum, India’s largest cryptocurrency exchange, WazirX, owned by Binance, continues to see growth in exchange volumes and new users thanks to the RBI’s clarification to lift the ban as a result of the Supreme Court ruling.
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