Citi India, Bans Use of Debit and Credit Cards to Purchase Cryptocurrencies
Recently, Citi India banned its customers from using its credit and debit cards to purchase or trade in cryptocurrencies.
Citi India, prohibits its customers from using its credit and debit cards to purchase or trade cryptocurrencies.
Some governments around the world are gradually cracking down on cryptocurrencies, and now banks have also started to block their clients from purchasing cryptocurrencies. Earlier Australian banks had banned clients from buying cryptocurrencies with credit and debit cards, and now banks in India have also forbidden the use of debit and credit cards for cryptocurrency purchases.
Recently, Citi India banned its customers from using its credit and debit cards to purchase or trade in cryptocurrencies. This is for the first time that an Indian bank has made such an announcement.
The move taken by Citi, the only multinational bank among the top card issuers in India comes only a month after banks like SBI, ICICI Bank, HDFC Bank, Axis Bank and Yes Bank suspended accounts of major Bitcoin exchanges in the country.
Citibank stated, “[There have been] concerns, both globally and locally, including from the Reserve Bank of India, cautioning members of the public regarding the potential economic, financial, operational, legal, customer protection and security-related risks associated in dealing with bitcoins, cryptocurrencies, and virtual currencies,” reported Quartz.
Abiding by the rules and regulations of the central bank of India, Indian banks are supposed to prohibit the use of debit and credit cards for purchasing cryptocurrency. However, to invest in the virtual currency market, investors can make use of conventional modes of payments like bank transfers and wire transfers to local cryptocurrency exchanges.
Finance Minister Arun Jaitley, during the Union Budget 2018 speech, stated,
“The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
In the beginning of this month, some unconfirmed rumors and FUD floated within the Indian market regarding the possibility of a cryptocurrency trading ban. Although, shortly after such rumors, Arun Jaitley clarified that the government will not ban cryptocurrency trading.
Law firm TRA managing partner Anirudh Rastogi, in an interview with Quartz, said that the decision taken by the government to disallow use of credit and debit card in cryptocurrency investment as a way to mitigate risk is unjustifiable.
Rastogi, managing several cryptocurrency businesses at TRA, says,
“Even if banks were to justify this as necessary to mitigate their risk, I would find such a view to be very conservative and unjustifiable, which leads me to think that this is arm-twisting.”
According to numerous research papers, a large number of investors using credit cards to purchase bitcoin and other cryptocurrencies do not process their credit card payments after investing. At the time of market instability, acquisition of debt to invest in the market can result in financial problems, particularly if investors require money in the short-term.
Soon after rumors of cryptocurrency trading ban in the country, Indian cryptocurrency exchanges Zebpay, Coinsecure, and Unocoin, confirmed that the Indian government has not changed its stance towards the local cryptocurrency exchange market, and it is still neutral.
It is to be noted that the Indian government as of now has not cleared its long-term stance towards Cryptocurrency exchange market.
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