Indian banks have begun sending emails to crypto investors warning them against the asset class. This is the latest move by the banking industry to dismiss digital currencies, as Indians take to the market with relish.
Banks in India have begun informing cryptocurrency investors about the risks associated with the market, according to reports from local media outlets. Major private banks like HDFC Bank, Axis Bank, and ICICI Bank have sent emails to customers who have invested in crypto, motivated by the fact that cryptocurrency exchanges have begun a major advertising spree.
The primary concern is that it could result in a lot of uninformed investors putting capital into the market, which can be highly volatile. They note that these advertisements are highlighting high return rates, which attract investors with little knowledge of the crypto space. A banking official stated,
Our worry is that we can put all sorts of algorithms to trace customers who are putting money in crypto and have conversations with them to be careful, beyond that we can’t do much because it’s depositors’ money.
However, the notice has already seen some criticism from investors, who point out the collapse of India’s third-largest bank (at the time) in 2020, Yes Bank. They state that if there are any risks, they’re already present in the Indian banking system. The Yes Bank incident led to depositors being unable to make withdrawals beyond a small limit — approximately $670 at the time.
Earlier, Indian business tycoon Anand Mahindra, chairman of the Mahindra group, clarified that he had not invested a “single rupee” in cryptocurrencies. He made the statement after a fake news story claimed that he had invested in the asset class.
Such fake news reports can tap into the ignorance of would-be crypto investors. But, as stated by pro-cryptocurrency groups, education and awareness matter. Should that be put in place, there the cryptocurrency market has immense potential in the country.
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India’s banking system has its problems, and those in the blockchain and cryptocurrency industry believe that technological changes can actually benefit its growing economy. Many of India’s poor lack access to basic financial services, and the cryptocurrency industry changes all of that with just a smartphone and an internet connection.
Developing countries in particular stand to gain a lot of the technology. The government seems to be warming up to this idea, as it appears to have moved away from banning the asset class. The most recent rumor suggests that it will classify cryptocurrencies as commodities.
Pro-cryptocurrency groups are currently in talks with the government, hoping to help them to formulate regulations that would benefit the economy while protecting investors. The next parliament session will likely see some discussion on cryptocurrency regulation, which could put an end to a long period of uncertainty in the country.