RBI barred banks to work with cryptocurrency exchanges

On Thursday, India’s Central Bank, RBI announced that the banks and financial institutions will no longer have any links to virtual or cryptocurrencies exchanges or other related services. RBI in its statement said that with an immediate effect, all entities regulated by RBI shall not deal or deliver services to individuals or businesses. Entities that are already providing such services shall soon quit the relationship within a specific time.

As per Financial Express, Deputy Governor of RBI, BP Kanungo, informed reporters that this specific time would be three months.

In the same statement on Thursday, RBI said that it had put together an inter-departmental group to review the issue of issuing its own digital currency.  

The bank explains that having quick changes in the landscape of payments industry with contributing factors like rising of private digital tokens and soaring cost of metallic money have encouraged Central banks all around the world to analyze the option of introducing fiat digital currencies.

RBI adds, “while many central banks are still engaged in the debate, an inter-departmental group has been constituted by reserve bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency.”  

The news takes up the concern again that India was about to completely impose a ban on cryptocurrencies. However, a panel formed last year, with a motive to study potential regulations has not yet released its proposals or findings. Over the past few months, various officials have stated publicly that government does not recognize Bitcoin as a legal tender.

PocketBits, one of the cryptocurrency exchange in India has played down the significance of the step. As per a statement published on Twitter, PocketBits argues that there is no need to panic as exchanges in India have already been cut off from banking access largely, where RBI has just reiterated what it has already implemented. The exchange also said that for now, there is no ban on bitcoin as there is no official government stand on this, Its just RBI taking the stand on the technology which they are implementing themselves in terms of Digital Rupee.

RBI has previously issued several warnings and cautioned the public over cryptocurrencies. The first warning was reported in 2013. It also released a warning in the month of December stating that it has not licensed any company to work with cryptocurrencies. It also raised concerns regarding ICOs to caution consumers.

Namita Vishwanath, technology law expert, a principal associate at InduaLaw, calls it a very aggressive move. She adds “Instead of RBI taking a holistic approach and seeing how to curb potential misuse, it seems to be a rather broad-stroke approach of completely prohibiting this altogether.”

India’s crypto exchanges oppose central bank’s move

Just after RBI made the announcement that entities regulated by RBI shall stop working with companies that offer cryptocurrency or other related services, exchanges in India are fighting back against this move.

Many startups like Unocoin, Coinsecure, and Zebpay have raised an alert regarding potential disruptions to their services in case their banking providers withdraw from the market within three months, as notified. However, the statements also suggest that the industry is planning to mount some legal challenge.

Jincy Samuel, Coinsecure chief operating officer, said that various stakeholders of industry are discussing the matter with Blockchain And Cryptocurrency Committee of India and the Internet and Mobile Association of India to see if they can help in getting a hearing at Supreme Court regarding the current decision of RBI.

Samuel also acknowledged the impact of central bank’s decision across the country. She says that the move has left users with no option other than to deposit or withdraw fiat from these platforms. To move forward, users will have to switch to the cash market.

In a statement out by Unocoin, it says that all the funds are absolutely safe with them and there is no need to worry. Unocoin also adds that as of now, no banks have issued any notice to them, and when they do it, the information will be communicated.

Zebpay also announced on Twitter that the sudden disruption in the banking services could affect their ability to service deposits or withdrawals. But at the same time, it also added that the customer’s assets and funds will stay secured and they are finding other options.

Ajeet Khurana, Zebpay’s chief executive tweeted “No way I am stopping. We will continue to do what is best for our customers, and what is best for our country. Am studying the current situation and will react shortly. [A]nd we will emerge stronger.”

Arizona’s cryptocurrency tax payments bill is being revamped

According to one of its sponsors, Arizona’s crypto tax payments bill is being revamped with an ambition to put it forward for a vote in the upcoming weeks.

Jeff Weninger, Arizona representative in an interview told Coindesk that a comprehensive work is being done on the measure that will allow residents to make payments of their tax liabilities with cryptocurrencies.

The measure was taken forward back in February by the Arizona Senate, however, the public records suggested that the matter went lingering in the House of Representatives unless a committee recommended its passage.

Weninger said, “We’re still working on moving it.” He also told that he has been working closely with Senator Warren Petersen who drafted measure on some changes. The key recommendation is to make the language more agnostic about which cryptos can be used with “bitcoin” term being slashed out of the bill.

These changes have been made in the bill to make it more agnostic about name specific digital currencies. However, it is up to Revenue Department to fix that.

The revamped bill will also let the tax officials decide whether to set up their own method to exchange crypto to U.S. dollar or let the startups compete and convert it and send U.S. dollars. He also mentioned that the changes will be implemented in a week or two. Also, they ’ve been working on it dedicatedly to make all the members understand it and be comfortable.

Arizona has established itself as a positive environment for startups working on this technology owing to the legislation passed till date. The first of it was signed last year into the law and recognized blockchain signatures and smart contracts as legally valid.

Considering all the factors, it shows that Arizona is welcoming the new-age entrepreneurs and this new technology quite well.

In the same interview with Coindesk, he lastly said: “We hope to lead on this and other technologies in future.”  

Ontario Regulator looking into the activities of Crypto Trading Platforms

The Ontario Security Commission is gathering information about the cryptocurrency trading platforms that are operating in the province.

OSC spokeswoman, Kristen Rose on Friday said that the agency has received many complaints about platforms selling cryptocurrencies that may qualify as securities. “These platforms and any businesses that are coins that are security to trade them, maybe offside security law,” she said.

Under Ontario law, exchanges must apply for recognition by the commission. The application made by the firms must describe the aspects of their business such as operations, corporate governance, access requirements, financial viability, and fees.  

None of the exchanges have been legally recognized in the province, nor any of them has been granted an exemption from the regulation.

However, the commission is not following a full-bore investigation but is only gathering information about how these platforms are working.

The OSC has freshly presented a document highlighting the priorities of this fiscal year with a prominent focus on cryptocurrencies. The main motive behind this move is to provide protection to customers while also promoting innovation and capital formation.  

OSC said ICOs in particular “present significant investor protection issues.” Ontario’s viewpoint towards ICOs is not necessarily unfavorable, however, the OSC approved TokenFunder’s sale in October.

Japan’s financial regulator suspends two crypto-exchanges

Japanese regulator has ordered two cryptocurrency exchanges to freeze their operations due to insufficient KYC procedures for two months.

This order has come to an effect immediately where Eternal Link and FSHO will face suspension until June 5 and June 7, respectively as per issued by the Financial Services Agency on Friday.

However, it is months long inquiry that these exchanges had not properly required consumers to give information like purposes of trade. They also did not follow procedures around reporting the suspicious transactions to FSA.

The agency said that failing to put these anti-laundering efforts is not in conformity with the Act on Prevention of Transfer of Criminal Proceedings.

The order on Eternal Link indicates that the firm has violated Japan’s laws by using customer deposits to pay company expenses, although temporarily.

FSA also found that Eternal Link, FSHO, and Last Roots have made insufficient improvements to their internal safety measures which protect user information against potential threats.

Bit Station has also been ordered to halt its operations, while five others were ordered to report back to FSA regarding their business improvements measures.

After $500 million worth of NEM tokens got stolen from the Coincheck exchange, FSA is stepping up its efforts to keep a check on domestic cryptocurrency exchanges to inspect loopholes in their business operations.