TL;DR Breakdown
• Reserve Bank of India clarifies there are no restrictions on cryptocurrencies.
• Indian bank users must comply with FEMA.
Cryptocurrencies investors are relieved after RBI clarifications about banks not accepting virtual currencies. The Reserve Bank of India clarifies that banks cannot cite the 2018 order prohibiting crypto trading. This announcement comes after banks warned their users by email they could not trade with decentralized currencies.
However, the RBI said the order will no longer be valid for now. The 2018 order is no longer valid because the Supreme Court eliminated the circular on the 4th of March, 2020.
The central bank said that any bank in India could not cite the circular by a Supreme Court order. This announcement has made cryptocurrency traders in the nation happy.
Banks battle against cryptocurrencies
The problem of Indian banks against crypto investors exploded on social networks. Traders noted that several banks, private and public, warned that it was forbidden to invest in cryptocurrencies using their platform. Among the banks that alerted such a measure were HDFC Bank and State Bank of India, although the list is long.
According to the news, some of these banks had warned users that their accounts would be suspended if they traded in cryptocurrencies via the platforms.
India’s largest crypto exchange WazirX called the RBI news a positive one. Hours later, the central bank ruled to reverse this measure that the banks had voluntarily caused.
RBI statements
The Reserve Bank of India stated that entities might not apply the order of 2018. However, they can continue with the control processes in cryptocurrencies to protect the client.
In these checks on virtual currencies, Indian banks can block accounts that do not comply with KYC standards. Banking entities can act against money laundering, terrorist financing, or any illegal act that affects the country.
But banks will also adhere to the Foreign Exchange Management Act (FEMA) and its compliance. Users must comply with these rules clarified by banking entities, which RBI supports.
Indirectly, banks will have control over cryptocurrencies, following the “rules” that are conferred on them in the country. Investors in the country will only have to adapt to this marketing scheme to keep decentralized commerce running.
Although with this announcement, RBI lost power in regulating cryptocurrencies, the battle is not over yet. RBI is likely to restrict cryptocurrencies by sticking to AML, CFT, PMLA, and FEMA laws.
For now, Indian investors have a good outlook for trading decentralized currencies. In the coming days, the country’s banks could issue other restrictions that the central bank supports.
