BIG ANNOUNCEMENT : RBI clarifies Crypto trading isn’t banned
The Reserve Bank of India Monday issued a clarification around Bitcoin and cryptocurrency trading, informing banks that they cannot warn customers against trading, after State Bank of India and HDFC Bank cautioned their customers against dealing in virtual currencies such as Bitcoin citing the April 2018 order of the RBI.
There has been a lot of uncertainty around crypto trading in India.
HIGHLIGHTS
- RBI has issued a clarification on crypto trading.
- RBI says banks cannot warn customers against trading.
- The statement is a huge of vote of confidence for crypto.
The Reserve Bank of India (RBI) late on Monday clarified that its 2018 order directing lenders to stop dealing in virtual currencies was quashed by the Supreme Court in March last year and cannot be cited by banks to deny services to people dealing in cryptocurrencies in India.
The clarification came after the nation’s largest private-sector bank HDFC Bank Ltd and State Bank of India cautioned customers through emails against dealing in virtual currencies such as bitcoin, citing the circular.
The crypto industry has been requesting RBI to provide clarification on the circular regarding crypto ban. Earlier this month, RBI informally asked banks to stay away from businesses dealing happening in cryptocurrencies. ICICI Bank, Yes Bank and Paytm Payments Bank were among those that severed ties with the sector, according to crypto exchanges.
Meanwhile, RBI has asked lending institutions to continue with customer due diligence processes. Though the central bank’s statement is objective, it does give an indication that the stance towards crypto trading is softening in India. It comes at a crucial time as the government is in process in framing rules to either ban or regulate cryptocurrency trade in the country; the latter option is a most preferred choice of crypto traders and exchanges operating in the country.
RBI’s clarification will directly help crypto exchanges that have been facing a lot of bottlenecks in their negotiations with banks. Nischal Shetty, founder and CEO, WazirX, had recently told about banking hurdles with respect to crypto trade.
Combining all these developments with the growing popularity of cryptocurrency trade in India, it is a high possibility that cryptocurrency trades will be legitimized in India. Regulating crypto coin trade instead of a complete ban could be the preferred choice of the government in view of the evolving circumstances.
“We welcome the move from RBI to clarify the stand around the old circular, which was set aside by Supreme Court. I hope the confusion around the same ends now. We also respect the concern the banks may have around AML (anti-money laundering) policies and discussions around the same will make the industry stronger and investors and investments safer,” said Sumit Gupta, CEO, CoinDCX.
