Bitcoin and Crypto Ban by RBI To Save Existential Crisis for Modi’s Plans

Reserve Bank of India (RBI) has given three months time to the regulated entities like banks, wallets etc so that the unwind all their positions with the business entities related to cryptocurrencies like bitcoin. As per the first bi-monthly monetary policy for the FY 2018-19, RBI has banned the regulated entities to stop providing services to any individual or business dealing in digital currencies like bitcoin with immediate effect.

However, RBI is not against holding cryptocurrencies. RBI like other central banks around the world, is planning to introduce a fiat digital currency. These digital currencies will be in circulation like paper currencies. RBI has also promised to reduce the cost of printing notes.

Why RBI Banned Banks From Dealing in Bitcoin and Cryptos

RBI has taken this step due to various risks associated in dealing such cryptocurrencies and the investors gets cautious. Further, dealing with these cryptocurrencies could facilitate money laundering, market integrity, tax evasion and fraud.

How India plans to centralize all identification/payments via the Aadhaar system

UIDAI’s Aadhaar national identity project, is built in collaboration with NPCI, RBI and other banks. There are several initiatives introduced, which will provide easy and efficient payment solutions to businesses and individuals. The Aadhar system will provide payment solutions through Aadhaar Enabled Payment System (AEPS), Aadhaar Payment Bridge (APB) and Aadhar Pay App.

If Aadhaar will be put on a blockchain, it would be a distributed database, and not a single, central one. This will remove the risk of getting hacked. Currently, in the Aadhar system, all the information are kept in the central database

Why RBI Move was essential to save Existential Crisis for Modi’s

The General Elections are due in 2019. Recently India is facing lot of frauds especially related with several public sector banks, which is affecting the image of Modi Government. The government now wants to stop all the frauds and scandals.  Therefore this steps by RBI is taken to safe guard the investors and to stop further frauds.

Overall, in the Finance industry Blockchain technology will ensure transparent and immutable transactions. The frauds like PNB would have been spotted easily and could have been avoided on blockchain. This is because Blockchain removes the intermediaries, maintain immutable log of transactions and facilitates the real-time execution of transactions.