Shaktikanta Das, the governor of the Reserve Bank of India (RBI), stated on 5th June, 2021 that the central bank’s position on cryptocurrency has not changed and that it continues to have “major concerns” about the volatile assets.
When asked if its position has changed, Das informed reporters during the regular post-policy press briefing. “There is no change in RBI’s position (on cryptocurrencies). Our circular clarifies the position very well.”
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)
Latest Clarification
The Central Bank had to issue a compliance note after news reports emerged suggesting that several banks were indirectly banning crypto trading, by threatening their customers and traders with account freeze.
Das explained that a revised notification to financial institutions was required because certain banks were still referring to the original circular. That circular was struck down by the Supreme Court, and this was an attempt to correct the record. The RBI however cautioned banks and asked 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.
“With regard to the RBI’s view (on cryptocurrencies), I had said earlier, we have major concerns around cryptocurrency which we have conveyed to the government.”
Shaktikanta Das
Das also stated the central bank does not provide financial advice, but that one should conduct his own analysis and due diligence before making such a decision.
Regulatory Confusion
Lack of any regulatory supervision has regularly created confusion in the crypto industry. It causes anxiety in crypto-trade and some cryptocurrencies have recently suffered huge drops in their per-unit trading values, eroding investor wealth. Cryptocurrencies have attracted the attention of some investors as a promising investment class.
To bring legitimacy to crypto-trade, the Blockchain and Crypto Assets Council (BACC) is setting up a formal board to oversee the implementation of a self-regulatory code of conduct for member crypto-exchanges. It aims to tackle multiple challenges that crypto-traders and exchanges face in the country.
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