Reserve Bank of India (RBI) released a statement that regulated entities such as banks are not to do business with any entities that deal in virtual currencies like Bitcoins , last week.
With the RBI's statement it appears that this is happening, and on Friday, a day after the statement was released, Yes Bank also emailed its customers saying the use of Yes Bank cards to purchase or trade in cryptocurrencies is prohibited.
But there are a number of sites in the country that are selling Bitcoins in India. What will happen next for them?
Rahul Raj, CEO and co-founder Koinex. "Such an uncanny move surely impacts the market as we saw a fall in token values and also a significant dip in daily trade volume. However the RBI has given banks a time frame to honour all pending settlements and this time essentially is also for crypto-industry players to initiate a dialogue with the regulators and realign the strategic approach because we feel a regulated framework will be better than a ring fencing approach.”
Paytm founder Vijay Shekhar Sharma praised the statement in a now-deleted tweet, though he added that companies should still look to leverage blockchain, the underlying technology behind Bitcoin. This is a view that may be popular with bankers - although no bank offered an on-the-record comment either, a senior employee at a private bank told that the decision to block Bitcoin was welcomed.
"There was too much volatility," he said. "It was like legal gambling. Someone needed to step in. Blockchain is really great, we're doing some really interesting stuff with it, but a lot of people were misusing Bitcoin and the other coins."