The demand for cryptocurrency investments continues to rise globally. However, the state of cryptocurrencies is still vague in India. It is mainly due to the lack of a set of regulatory laws for the crypto space in India and partly because the private banks in India discourage crypto investments by citing a 2018 circular by the Reserve Bank of India (RBI). Now, as per a recent circular by the RBI, banks can no longer use the 2018 circular to ban crypto trading in the country.
Now, for the unaware, the RBI, back in 2018, barred the trading of cryptocurrencies in India for the sake of a central digital currency. Since then, the private banks have been quoting the 2018 RBI circular to discourage customers from investing in crypto.
However, the recent circular by the RBI clarifies that banks cannot use its 2018 circular to discourage crypto investments in the country anymore. The previous circular that barred crypto trading by regulated entities in India was “set aside” by the Supreme Court last year, said RBI’s Chief General Manager Shrimohand Yadav.
“As such, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,” Yadav said in a statement.
Now, although the current RBI circular says banks cannot discourage crypto investments by quoting the 2018 RBI circular, they can take their own call when it comes to supporting crypto investments in the country.
“Banks (and NBFCs) may continue to carry out due customer diligence processes, in line with regulations governing standards for Know Your Customer, Anti-Money Laundering, Combating of Financing of Terrorism and obligations of regulated entities under Prevention of Money Laundering Act, 2002 – in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act for overseas remittances,” Yadav further added.