The Reserve Bank of India (RBI) has said that banks or other financial entities no longer need to cite the RBI’s 2018 rule that barred them from dealing with virtual cryptocurrencies. According to sources familiar with the report, the banking ban rule is no longer in effect after the Supreme Court ordered to set aside for now. This development emerged after media reports suggested that many banks have been turning virtual currencies customers away. By enforcing the rule banks and other financial institutions were barred from cooperating with business associated with crypto exchanges. This included SBI Cards & Payment Services Ltd, one of India’s largest credit card issuers.
However, investing in crypto has always been 100% legal in India and the new RBI circular clearly confirms the right to do business with crypto firms,” said Avinash Shekhar, co-chief executive officer at ZebPay, India’s oldest crypto exchange. He added that the clarification will attract more investors to the virtual currencies. The RBI’s concerns around money laundering should help to spur regulations, making the industry safer and stronger, said Sumit Gupta, CEO and co-founder of crypto exchange CoinDCX.
In the interim, the RBI has requested that banks and crypto exchanges continue doing their customer due diligence. This will allow crypto transactions to proceed and business to continue, as long as they stay within the KYC, AML, CFT, operating standards. Also, these banks and exchanges must comply with the provisions under the Foreign Exchange Management Act (FEMA) for overseas remittances and follow the Prevention of Money Laundering Act, (PMLA), 2002.
