Reserve Bank of India claiming that there is no ban on banking services for accounts that deal with Bitcoin

The Reserve Bank of India issued a new circular today, clarifying that while banks and other institutions need to carry customer due diligence, cryptocurrencies are not outlawed in the country.

Reserve Bank of India made important clarifications on the current regulations on Bitcoin and other cryptocurrencies

As such, the Reserve Bank of India has clarified its stance on cryptocurrencies, stating that there is no ban on banking services for accounts dealing with cryptocurrencies.

It has also allowed banking institutions to do its due diligence for customers who are involved in digital assets:

“Banks, as well as other entities addressed above, may, however, continue 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.”

Banks and regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to a circular that RBI Issued back in 2018, the bank now clarifies the situation. Over the past few weeks, major banks like HDFC Bank and SBI Card officially cautioned their customers against conducting cryptocurrency transactions.

However, the central bank points to the fact that the circular is no longer valid:

“As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from.”

The institution said that these references are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020.

In other words, institutions can no longer quote this circular when advising clients against dealing with cryptocurrencies.

Earlier in May that the Indian government is purportedly considering regulating the market instead of flat-out banning Bitcoin. With this in mind, it appears that the most recent circular is in continuation of this stance.

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