The Reserve Bank of India finally clarified its stance on the recent moves by banks, in which they all denied offering their services to the clients involved in crypto-related activities.
The Indian crypto community took a sigh of relief on May 31, when the RBI issued a clarification regarding cryptocurrency and informed the lenders that they can not instruct the traders to not get involved in crypto-related activities, using an old order.
“Such references to the above circular by banks/regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020,” asserted the RBI.
It further added, “As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.”
Before the RBI made its announcement, several private and public banks in India warned the customers from dealing in cryptocurrency. The banks cited the 2018 circular released by RBI, in which the central bank imposed the blanket ban on the lenders. While referring to the same circular recently, the banks also denied offering their services to certain cryptocurrency exchanges in the country.
A month ago, the banks cut off their ties with several crypto exchanges in India, one of them was WazirX, the largest crypto exchange in the country. The trading platform said that throughout the month, the exchange has repeatedly faced the issue with deposits and withdrawals of funds.
A report published on May 31, stated that several banks like HDFC Bank, State Bank of India (SBI) and many more have instructed the customers to not deal in crypto-related activities, otherwise they might have to face some consequences to it.
After the RBI clarified its stance on cryptocurrency, the CEO of WazirX, Nischal Shetty, said, “This is a very positive development for the whole industry. There was a lot of confusion among banks whether they can service their clients in the industry. This notification makes it clear.”
Shetty also believes that soon the exchange would bring back the banking-related services for the customers on its platform.
Although RBI has not ordered banks to stop offering its services to crypto-related activities, instead it has asked it and several other entities to continue the customer due diligence process in line with regulations.