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With several banks pulling away from cryptocurrency exchanges, the future looks blurry for virtual currencies in India. The banks have decided to steer clear of exchanges and the government is yet to move the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the Parliament.

The sudden withdrawal of services by banks has triggered concerns. Last year the Supreme Court set aside a RBI circular that banned cryptocurrency trading in India. Is the shutting off services to exchanges a sign of things to come?

Banks have not explained their decision. They are believed to be still quoting the 2018 RBI circular quashed by the Supreme Court, and pointing out that they have not yet received any communication from RBI since.

In the absence of any clarification from the RBI, the cryptocurrency exchanges as well as crypto users are left in the lurch. They are looking up to the regulator to clear the air on whether banks can service the crypto industry or not.

There are more than 1 crore crypto users in India with an estimated value of Rs 10,000 crore. They need to tread cautiously as distancing by banks could be an indicator of the future. RBI has already said that it has “major concerns” on the cryptocurrencies traded in the market and have communicated its position to the government.

With a growing number of young people jumping on the cryptocurrency bandwagon to make a quick buck, there is need to educate them about the volatility and risks involved. With virtual currencies giving returns as high as 2000%, double-digit growth can hardly lure them. At this hour it is prudent to watch from the sidelines till the banking regulator and the government move to clear the air about the future of cryptocurrencies in the country.