After the Reserve Bank of India issued a statement that directed local banks to stop doing commerce with cryptocurrency exchanges, traders in the country began calling for a campaign against the measure.
The campaign started on Twitter with the hashtag #RBICantStopMe, which has so far reached around 120,000 people.
“Campaign against the preposterous decision by the RBI to ban the banks from catering to crypto service providers like exchanges. It will only promote incorrect means of crypto acquisition,” said Naimish Sanghvi, director of local publication Coincrunch.in.
Sanghvi is probably referring to the idea of using sites like LocalBitcoins to acquire cryptocurrency with cash rather than through more transparent means, using exchanges.
It’s likely that some cryptocurrency transactions will move underground to the realm of cash, sparking a new black market.
RBIs move was so impactful in India that Bitcoin’s price fell by up to 15% in local exchanges.
Some say that exchanges should have been regulated rather than completely done away with, arguing that this would provide a proper venue to combat illicit transactions.
“If the government wants to curb black money and levy tax on the transactions, they have to regulate all channels for fund flows. Shutting them down defeats the purpose of regulation. Now, banks will not be able to have any fund flows that happen through regulated entities,” said Anirudh Rastogi, managing partner at a tech law firm.
The regulatory environment in India has become so untenable in some instances that larger exchanges shifted their operations outside of the country.
Bitxoxo, for example, is now moving to Australia, citing that “regulations are not clear in India.”
According to estimates provided by industry analysts in India, the country has more than 3 million traders. Some of these traders will go underground while others might leave the market altogether as a result of the RBI’s new policy.