The Reserve Bank of India (RBI), the central bank of India, has officially notified the bank that its banking ban is no longer valid because the ban was revoked by the Supreme Court of India more than a year ago. Despite the Supreme Court’s ruling, banks have been citing the Reserve Bank of India’s notice when handling cryptocurrencies.
The Reserve Bank of India asks banks to stop citing its “no longer valid” circular on cryptocurrencies
The Reserve Bank of India (RBI), the central bank of India, issued a notice on Monday to clarify its position on cryptocurrencies. The notice is titled “Customer Due Diligence for Virtual Currency Transactions” and aims to “target all commercial and cooperative banks, payment banks, small financial banks, NBFCs and payment system providers.”
The Reserve Bank of India wrote:
Media reports have drawn our attention. Certain banks/regulated entities have warned their customers not to conduct virtual currency transactions by referring to the Reserve Bank of India circular on April 6, 2018.
The April circular informs banks that they are prohibited from conducting cryptocurrency transactions. However, the Supreme Court of India cancelled the circular in March last year, allowing banks to resume providing services for crypto businesses (including cryptocurrency exchanges).
The Reserve Bank of India clarified in its notice on Monday: “Such references to the above circular by banks/regulated entities are unreasonable because this circular is a hon’ble Supreme Court petition on March 4, 2020. (Civil Law, No. 528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India), which elaborates:
Therefore, according to the order of the Hon’ble Supreme Court, the notice is no longer valid from the date of the Supreme Court’s decision, so it cannot be cited or cited.
The central bank added: “However, banks and other entities mentioned above may continue to conduct customer due diligence procedures in accordance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, in addition to ensuring compliance with the Foreign Exchange Administration Act (FEMA) In addition to the relevant regulations on overseas remittances, it is also based on the “Prevention of Money Laundering Act” (PMLA) of 2002 to combat terrorist financing (CFT) and the obligations of regulated entities.”
Although bank restrictions were lifted in March last year, it is reported that some banks in India are still restricting crypto transactions. According to reports, some customers have received warning emails from their banks stating that they are not allowed to use bank accounts or credit cards for encrypted transactions.
Some media even reported that the Reserve Bank of India informally asked the bank to cut ties with crypto businesses and traders. However, the National Payment Corporation of India stated that it will not prohibit cryptocurrency transactions through UPI.
At the same time, the Indian government is still working on cryptocurrency regulation. An encryption bill should have been proposed at the parliamentary budget meeting, but this is not the case. Last month, the media reported that the government plans to set up a panel of experts to study cryptocurrency regulation.
What do you think of the clarification made by the Reserve Bank of India to the bank regarding cryptocurrency? Let us know in the comments section below.
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