HDFC Bank blocks all its cards to buy, trade cryptocurrencies
Mumbai: After global banks like Citibank, Bank of America and JP Morgan Chase, HDFC Bank Ltd Tuesday barred the use of its credit, debit and prepaid cards to buy or trade in cryptocurrenices like bitcoins,
In a late evening note to its customers on Tuesday, HDFC Bank said, “You may be aware of the increasing global apprehensions regarding Bitcoins, Cryptocurrencies and virtual currencies. The Reserve Bank of India (RBI) has also cautioned the public regarding the potential economic, operational, legal and security related risks associated in dealing with such currencies.
“To ensure our customers’ security, we have decided to not permit usage of HDFC Bank Credit, Debit and Prepaid Cards towards purchase or trading of such Bitcoins, Cryptocurrencies and virtual currencies, on merchants suspected to be dealing in cryptocurrency or online foreign exchange trading or both...”
Ever since the price of bitcoins skyrocketed from a little under $1,000 in 2016 to touch nearly $20,000 in 2017, people have been faced with the dilemma of whether or not to buy cryptocurrencies.
On the one hand, there is the fear of losing out on an opportunity to make money, investing in a virtual currency whose price is extremely volatile and whose true value cannot be assessed. It comes with its own risks as well. For instance, the current value of a bitcoin is under $10,000.
Adding to the confusion, most governments remain non-committal on the legality of bitcoins since it is not regulated by central banks. Some governments like that of South Korea and China have explicitly warned investors to exercise caution while those like the Indian government have begun imposing a tax on the gains from the sale of bitcoins.
A bitcoin is an open source peer-to-peer electronic cash system that runs on blockchain technology, which is a distributed ledger that contains details of every transaction, allowing a user’s computer to verify the validity of each transaction of this virtual currency. Hence, the transactions are transparent to every user. In India, you can buy bitcoins from dedicated exchanges like Unocoin or Zebpay by downloading apps or using websites.
According to a 12 March Bloomberg report by the Bank for International Settlements (BIS)—a club of the world’s largest central banks—on Monday, “digital currencies are a revolutionary tool that central banks should consider, but they remain far too risky to be used as legal tender any time soon”.