The Reserve Bank of India (RBI) has placed no prohibition on banks to provide accounts to cryptocurrency traders; however, many banks remain anti-crypto and deny services to cryptocurrency users. The Reserve Bank of India uses monetary policy to create financial stability in India, and it is charged with regulating the country’s currency and credit systems.
In a recent response to a Right to Information query, the RBI stated that there is no prohibition on banks to provide services to cryptocurrency users. Despite there being no law banning cryptocurrency trading, banks remain anti-crypto and are still not treating crypto-related activities on par with other legal activities.
Banks’ anti-crypto orientation is inappropriate
The RBI had placed a banking ban on crypto; however, the ban was lifted by the Supreme Court of India on March 4.
The Supreme Court’s judgment of 180 pages stated that the Reserve Bank’s actions were inappropriate in removing cryptocurrency businesses from banking accessibility despite crypto trading not being illegal under any Indian law. Furthermore, there have been no proven records of crypto-related activities, causing harm to these banks.
While the judgment provided some relief to crypto enthusiasts in the country, it did not change the banks’ anti-crypto orientations. Numerous reports reveal that accounts of cryptocurrency users are being denied services by banks in various ways.
Banks freeze and close crypto users’ accounts
Banks have been reported to freeze and close bank accounts for buying and selling crypto assets. Some banks have rejected international wire transfers and/or international debit card payments due to users participating in crypto-related activities.
The banks claimed that they are waiting for the RBI to provide an update following the Supreme Court’s judgment. However, the RBI is under no legal obligation to provide one such update.
On the other hand, some banks are providing services to crypto exchanges, while some of them have placed a withdrawal restriction.
The RBI’s response to the Right to Information query by simply stating that there is no prohibition on banks shows that the bank is not very interested in providing regulatory clarity.