Relief to Crypto Investor in India as RBI ask banks to carry out due diligence
The Crypto Community in India draw breath on Monday 31st May 2021 as Reserve Bank of India clarified that banks cannot cite its 2018 order on virtual currencies as it has been set aside by the Supreme Court of India in 2020 .
Shrimohan Yadav, Chief General Manager of RBI in the circular said,
“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular DBR.No.BP.BC.104/08.13.102/2017–18 dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020, in the matter of Writ Petition (Civil) №528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from,”
As a result of this notification, Confusion among several large private and public sector lenders clarifies and Customers can deal in digital cryptocurrencies with exchanges without any deny of service from them.
Reserve bank of India also ask banks to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.
In general, It is very positive move for Crypto Industry and India has seen large number of people entering in last one year.
RBI has not so far shaped an assessment on crypto regulations as the regulator has let out concerns against utilizing digital money as a mode of exchange. We don’t know yet since the central bank has not made its position clear on regulations
Can this clarification mean that the RBI is endorsing the crypto trading?
I think, Even though the clarification will provide exchanges protection to service crypto dealing, it wont fully open the doors as banks can impose board approve policy to avoid legal battle in future
What is your opinion?