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Reserve Bank of India Clarifies That There Is No Ban on Cryptocurrencies

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Mon, 05/31/2021 - 14:09
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Alex Dovbnya
The RBI has clarified that banks cannot close their customers' accounts for dealing with crypto
Reserve Bank of India Clarifies That There Is No Ban on Cryptocurrencies
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The Reserve Bank of India has clarified its stance on cryptocurrencies, claiming that there is no ban on banking services for accounts that deal with crypto.

It has also allowed banking institutions to do its due diligence for customers who are involved in digital assets:

Banks, as well as other entities addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.

Over the past few weeks, major banks like HDFC Bank and SBI Card officially cautioned their customers against conducting cryptocurrency transactions, citing the RBI's circular from 2018.

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However, the central bank points to the fact that the circular is no longer valid:

As such, in view of the order of the Hon'ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from.

As reported by U.Today, the infamous crypto ban—which prohibited banks from dealing with the crypto industry—was quashed by the Supreme Court back in March 2020.

A recent report by The Economic Times also suggests that the Indian government may give its draconian plan to ban holding, trading and mining crypto "a fresh look."

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.