Crypto Community Relieved after RBI Clarifies Crypto Trading Isn’t Prohibited

The cryptocurrency investment community was relieved late on Monday after the Reserve Bank of India told banks not to cite a 2018 central bank circular as a reason to set back crypto trades. 

The 2018 note had forbidden banks from facilitating such transactions but has since been abolished by the Supreme Court. The regulatory body said that banks must continue with other routine due diligence measures on the deals.

The RBI order comes after local media reports that financial firms, including SBI Cards & Payment Services Ltd., cautioned customers against dealing in cryptocurrencies by referring to a circular issued by the banking regulator on April 6, 2018.

Indian authorities have expressed their concern severally for crypto assets being used for criminal activity such as money laundering and funding terrorism.

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The RBI said that such references to the above circular by banks/regulated entities are inappropriate as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020.

It added that the circular is no longer valid from the date of the Supreme Court judgment given the Hon’ble Supreme Court order and, therefore, cannot be cited or quoted.

Major Relief for WazirX

India’s largest cryptocurrency, WazirX, has faced issues with deposits and withdrawals of customer funds with the exchange’s banking partners throughout this month.

Nischal Shetty, Founder and Chief Executive Officer of WazirX, said that this is a very positive development for the whole industry. There was a lot of hesitation among banks about whether they can service their clients in the industry. The notification has made it explicit.

Shetty also said that WazirX should now bring back all its banking-related services pretty quickly.

Demand for Digital Currencies

Avinash Shekhar, co-Chief Executive Officer at ZebPay, India’s oldest crypto exchange, said investing in crypto has always been 100% legal in India. 

The new RBI circular confirms the right to do business with crypto firms. He added that the clarification would attract more investors to digital currencies.

The RBI has requested banks and other regulated entities to continue to carry out customer services under regulations governing standards for Know Your Customer, Anti-Money Laundering, Combating of Financing of Terrorism, and obligations of regulated entities under the Prevention of Money Laundering Act. 

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The banks should also ensure they comply with relevant provisions under Foreign Exchange Management Act for overseas remittances.