RBI says banks cannot cite 2018 circular restricting cryptocurrency trading

The cryptocurrency community heaved a sigh of relief on Monday when the Reserve Bank of India (RBI) issued a clarification stating that commercial banks cannot invoke its crypto banking ban, which expired in April 2018, to deny services to customers involved in digital asset transactions.

In a notification issued on Monday, the Reserve Bank of India said: "Through media reports, it has come to our notice that certain banks/regulated entities have cautioned their customers against dealing in virtual currencies with reference to the RBI circular dated April 6, 2018. Such reference to the said circular by the banks/regulated entities is inappropriate as the same has been set aside by the Supreme Court on March 4, 2020. Hence, in view of the Supreme Court order, the said circular is no longer in force with effect from the date of the Supreme Court judgment and therefore cannot be cited."

The RBI’s clarification comes amid reports that the country’s top lenders, State Bank of India and HDFC Bank, are sending reports to certain customers, asking about their virtual currency transactions and warning of cancelling or suspending their bank cards, citing a 2018 RBI circular that prohibited lenders from servicing cryptocurrency exchanges.

However, India’s Supreme Court lifted the ban on the banking sector in March 2020, bringing joy to Indian investors and local exchanges. Even so, local exchanges have been disrupted in recent weeks after several private lenders closed payment channels for merchants involved in cryptocurrency transactions.

The latest statement from the RBI only made it clear that the central bank has not yet asked banks to stop providing services to exchanges. It did not explicitly ask banks to resume services to cryptocurrency exchanges and said that lenders should ensure necessary compliance.

"Banks as well as other entities mentioned above may, however, continue to carry out customer due diligence procedures as per regulations relating to Know Your Customer (KYC), Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT) and obligations of regulated entities under the Prevention of Money Laundering Act, 2002 (PMLA) besides ensuring compliance with relevant provisions of the Foreign Exchange Management Act (FEMA) regarding overseas remittances," the notification said.

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RBI says banks cannot cite 2018 circular restricting cryptocurrency trading

Beijing Business Daily: The three major exchanges cleared the cryptocurrency market and the cryptocurrency industry withdrew

Coin Zone Trends: Bitcoin Price Trends Based on Big Data This Week (2016-12-12)

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