Investors aren’t the only ones paying more attention to cryptocurrency trading lately, as a period of wild market swings has increasingly put this nascent asset class on the radar of central bankers in the world. United States, Europe, China, India and more.
At the extreme of this new intervention, Paytm Payments and other gateways in India have would have has completely stopped allowing transactions on cryptocurrency exchanges in this country. Paytm has stopped facilitating transactions where rupees are said to have flowed from (or into) Paytm bank accounts to make crypto payments.
Nischal Shetty, founder and CEO of crypto startups WazirX, told the site the gateways shut down after ICICI Bank refused to allow crypto-related payments.
As Reuters reported Earlier this month, India’s central bank “informally” told financial institutions (FIs) that they should sever their relationships with cryptocurrency exchanges and cryptocurrency traders. This move comes despite the Supreme Court ruling that banks can effectively interact and serve crypto players. The central bank’s decisions come as the country, according to Reuters, is “drafting a law” to ban cryptos outright.
Whether the laws come to fruition or not, India’s central bank push goes hand in hand with that of other central banks around the world. Also this week, China’s central bank said digital currencies are not real and should not be used in services or financial markets.
And as reported by PYMNTS, the China Internet Finance Association, the China Banking Association, and the China Payment and Clearing Association said, “Financial institutions, payment institutions and other member units must seriously strengthen their social responsibilities. They must not use virtual currency to set the price of products and services, underwrite insurance activities related to virtual currencies or include virtual currencies within the scope of insurance liability, and must not, directly or indirectly , provide other services to customers. “
There also doesn’t appear to be a safe haven for cryptos here in the United States. On Thursday, May 20, Federal Reserve Chairman Jerome Powell said in a video message that cryptos may present “potential risks to … users and the financial system as a whole.” He said more attention needed to be paid to regulation and to “ private sector payments innovators that are currently outside the traditional regulatory frameworks applied to banks, investment firms, and financial institutions. other financial intermediaries … to date, cryptocurrencies have not been a convenient way to make payments, given, among other things, their fluctuations in value. “
The Fed is studying central bank digital currencies (CBDCs), of course, and China is at the forefront of major economies launching digital fiat. It is no exaggeration to think that the major central banks – as evidenced by China, India and the United States – are changing the “Wild West” aspects of crypto trading and speculation, in part to their own. purposes.
Crypto proponents have said the allure of bitcoin and other offerings has been linked to the ability to bypass traditional and centralized financial conduits. This would include the banks, as well as the central banks, which have a vested interest in maintaining the status quo, certainly in terms of policing and monitoring monetary policy, reserves, etc. Engaging banks in efforts to close the channels for crypto to gain (more) general acceptance among institutional investors and consumers could pave the way for a smooth introduction of CBDCs, without too much competition.
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