RBI asks banks not to stop customers & exchanges from dealing in crypto
After reports that several banks are forcing crypto exchanges and traders to stop trading in cryptocurrency, the Reserve Bank of India has finally issued a compliance note. Acknowledging media reports that certain banks have cautioned their customers against dealing in crypto, RBI has clarified that the old 2018 circular that the banks are referring to is no more in effect.
In April, 2018, the RBI had issued a circular prohibiting banks from providing services to cryptocurrency exchanges. However, the Hon’ble Supreme Court in March, 2020, had set aside the circular. (Internet and Mobile Association of India v. Reserve Bank of India, W.P. (C) 528/ 2018)
Customer Due Diligence
The RBI, however, asked banks and other entities to continue to carry out customer due diligence in line with KYC, Anti Money Laundering, Combating of Financing of Terrorism as well as PMLA Act, 2002 and FEMA.
The tumultuous tale of cryptocurrencies in India
Amid reports that Indian banks are indirectly banning crypto exchanges, reports first emerged that the government may penalize possession of cryptocurrency. However, in a ray of hope, the government had asked companies and crypto exchanges to disclose crypto related transactions. It was also reported earlier this month that the government may establish a new crypto-regulation panel.
Do subscribe to our Telegram channel for more resources and discussions on technology law and news. To receive weekly updates, don’t forget to subscribe to our Newsletter.
You can also follow us on Instagram, Facebook, LinkedIn, and Twitter for frequent updates and news flashes about #technologylaw.
