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As such, in view of the order of the Hon'ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from.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