In April 2018, India’s central bank, the Reserve Bank of India (RBI) issued a circular stating that all regulated entities – banks, payment gateways and non-banking financial companies – could not provide services to any individual or business dealing in cryptocurrencies. This effectively banned cryptocurrency trading in India.

India had become a hub for cryptocurrency activity due to its large population of tech-savvy young people and its favourable regulatory stance toward virtual currency-friendly countries like Japan and South Korea. However, the RBI ban has made it difficult for investors to buy or sell cryptocurrencies due to lack of access to banking services.

The main reason behind the ban is that there are concerns about investor protection as well as money laundering risks associated with digital currencies. The government believes that these risks may undermine both the economy and nation’s security if left unchecked. Further, some experts fear that cryptocurrencies could be used by criminals or terrorists to finance illegal activities such as drug trafficking and tax evasion.

The RBI also argued that since cryptocurrency transactions are anonymous they could be used by individuals to launder money obtained through illicit means such as bribery or corruption – though some argue this can be done through other traditional methods too! Finally, there is also concern over volatility in digital currency prices which may lead investors into losses if they are unable to identify true values accurately enough while trading them on unregulated exchanges.