- RBI’s circular clarifies that bank cannot discourage crypto investments citing the 2018 order
- It is on the banks to apply due diligence before supporting cryptocurrencies.
- Indian Startups evolving cryptocurrencies applaud the move.
The RBI published a circular on May 31, 2021, that clarified some points of cryptocurrencies in India. After a buzz that some private and public banks are advising customers against cryptocurrency investment and withdrawing payment support for crypto trading platforms, the circular from the Central Bank has stated that banks can not prevent customers from making cryptocurrency investment, saying 2018 circular.
However, the public may not view the circular as a direct endorsement of cryptocurrencies by the RBI; therefore, the official regulatory framework for the Indian Crypto market is still awaited.
Read More about the Crypto ban
The RBI’s latest circular on Crypto –
“References to the (old) circular by banks/ regulated entities are not in order, as it was set aside by the Hon. Supreme Court on March 4, 2020. As such, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited/quoted from,” stated Shrimohan Yadav, Chief GM, RBI. While the clarification is valuable, the RBI has left room open for banks to take their own decision by not mandating that not complying with cryptocurrency trading platforms and wallets in India would go against the law.
Yadav stated, “Banks and NBFCs may continue to carry out due diligence processes, according to regulations governing standards for KYC, AML (Anti Money Laundering), Combating of Financing of Terrorism and obligations of regulated entities following Prevention of Money Laundering Act, 2002. In addition, banks to ensure compliance with relevant provisions under Foreign Exchange Management Act for overseas remittances.”
The circular has come when cryptocurrencies are the talk of the town, and the crypto space in India has seen great growth ever. Therefore, the need for robust regulatory laws and rules in India is at the higher most.
ICICI bank was one of the major banks to discontinue offering banking and payment services for cryptocurrency platforms, citing 2018 circular.
Sumit Gupta, founder and CEO of Indian Cryptocurrency Index CoinDCX, commenting on the circular, said, “We respect the AML policies of the banks and concern out of it, discussions around the same will make investments safer.”
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