RBI: No prohibitions on banks to provide banking to cryptocurrencies
India’s central bank, Reserve Bank of India (RBI), has clarified that there is no prohibition on Indian banks to provide banking to cryptocurrencies and related businesses. This clarification comes after an RTI (Right to Information) query was filed by Unocoin co-founder BV Harish.
On April 2018, RBI had set a blanket ban on cryptocurrencies by stopping banks from serving cryptocurrency-related businesses. This caused a lot of confusion in the market, with the majority of the newcomers into crypto inferring that the blanket ban makes cryptocurrency illegal in India (which it was not).
In March 2020, the ban was lifted after the Supreme court stepped in and passed a judgment stating that the RBI had no right to deny banking services to the cryptocurrency industry. Following this, local exchanges in India rushed to provide banking services to their clients. But due to a sudden influx of cryptocurrency businesses and the coronavirus pandemic, banks denied banking to cryptocurrency businesses even after the Supreme court judgment.
This RTI response by RBI clarifies that banks can provide banking services to cryptocurrency businesses.
“Bankers have been saying that they need new RBI circulars mentioning that there are no more restrictions for them to provide bank accounts for crypto businesses. Now, we have received a positive response from the RBI,” Harish said.
Blockmanity had reached out to HDFC Bank and ICICI Bank (two of India’s largest private sector banks) but our queries have remained unanswered.
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