India's central bank, the Reserve Bank of India (RBI), has urged several financial institutions to stop offering services to cryptocurrency exchanges and traders due to the highly speculative market, Reuters has learned, citing sources familiar with the matter.
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A senior executive at one of the Indian banks told Reuters that the watchdog was trying to figure out why they are dealing in such business "when it is ultra speculative."
"A lot of money flows overseas via this trade which the RBI is not comfortable with as it may lead to money laundering," he added.
As of press time, the watchdog did not comment on the matter. The RBI's guidance comes as India is working on a new law to prohibit cryptocurrencies in the country. The local authorities also want to penalize anyone dealing in them.
As iHodl earlier reported, the Indian authorities are working on a law aimed at banning cryptocurrencies. The law is expected to become one of the strictest in the world when it comes to regulating cryptocurrencies and will criminalize the holding, issuance, mining, trading and transfer of crypto assets.
The proposed regulation is in line with the agenda announced by the authorities in January, according to which "private virtual currencies," including bitcoin, should be banned.
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