Citi India prohibits use of its cards to buy bitcoins

Citi India prohibits use of its cards to buy bitcoins

Context:

• Citi India announced its customers cannot use its credit and debit cards to purchase or trade in cryptocurrencies.
• The lender has informed its customers about the decision.
• This is the first instance that a bank in India has taken such a step.

Rationale behind this decision:

• The move is in line with Citigroup’s global policy that has barred usage of cards for purchase of and trade in cryptocurrencies.
• To protect customers
• To deal with security related risks associated with bitcoins.
• Recently, the banking regulator had voiced concerns over virtual currencies and had not given any licence or authorisation to any entity or company to operate trading platforms or deal in bitcoins or any virtual currency.

Bitcoins:

• Bitcoin is a cryptocurrency and worldwide payment system.
• It is the first decentralized digital currency, as the system works without a central bank or single administrator.
• The network is peer-to-peer and transactions take place between users directly, without an intermediary.
• These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain.