Citibank bans use of cards to buy cryptocurrencies

Bitcoin may lose 50 per cent of its value from its current level as fears over regulatory clamp-downs have spurred a rout among cryptocurrencies this week, Citi analysts said in a report.

By: ENS Economic Bureau | Mumbai | Published: February 14, 2018 2:09:46 am
Citibank bans use of cards to buy cryptocurrencies Banking sources didn’t rule out other banks also banning the use of cards to purchase cryptocurrencies.

Banks in India have started putting curbs on buying cryptocurrencies like Bitcoins through debit and credit cards. After several banks in the UK and the US, Citibank has banned the usage of its credit card and debit cards towards purchase or trading of Bitcoins, cryptocurrencies and other virtual currencies in India.

According to the bank, this is being done “given concerns, both globally and locally including from the Reserve Bank of India cautioning members of the public regarding the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with bitcoins, cryptocurrencies and virtual currencies”.

Banking sources didn’t rule out other banks also banning the use of cards to purchase cryptocurrencies. Many banks in Britain and the US had already banned the use of credit cards to buy Bitcoin and other cryptocurrencies. Lloyds, Britain’s biggest lender, said it would ban its credit card customers from buying crypto following the lead of US banking giants JP Morgan Chase & Co and Citigroup.

Bitcoin may lose 50 per cent of its value from its current level as fears over regulatory clamp-downs have spurred a rout among cryptocurrencies this week, Citi analysts said in a report.

The Income Tax Department has issued about one lakh notices to people who have invested in cryptocurrencies like Bitcoin without declaring these in their income tax returns. Finance Minister Arun Jaitley had indicated about a ban on crypto currencies in his Budget speech on February 1.

“The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these cryptoassets in financing illegitimate activities or as part of the payment system,” Jaitley had said. Jaitley’s statement has been widely interpreted as an upcoming blanket ban on digital cash. However, cryptocurrency investors and exchanges are holding on to the interpretation that India will only be going after cryptoassets used in unlawful activities.

Meanwhile, the government has indicated that it will explore use of block chain technology proactively for ushering in digital economy.

In China, websites offering cryptocurrency trading services or advertising the digital currency market have been scrubbed from search engines and social media in a bid to wipe out the trade. Chinese authorities have already banned initial coin offerings (ICOs) and domestic exchanges and are now blocking access to both domestic and foreign services “to prevent financial risk”.

The Reserve Bank of India (RBI) had earlier warned those trading in Bitcoins and other virtual currencies regarding the risks involved in virtual currencies. The RBI has not given any licence or authorisation to any entity or company to operate schemes or deal with Bitcoin or any other VC.

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