Hours after major Indian banks, including State Bank of India (SBI) and HDFC Bank sent emails to customers warning against using their services to trade in crypto currencies, the Reserve Bank of India (RBI) has clarified that banks cannot cite the 2018 circular for such communications. This is because, the circular was quashed by the Supreme Court of India on a petition filed by Internet and Mobile Association of India in March, 2020.
The RBI said “Such references to the above circular by banks/ regulated entities are not in order” and “in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.”
As expected, shortly after the RBI clarification, there has been a flood of reactions from the pro-crypto lobby welcoming the RBI move and interpreting it as a move from the regulator in support of the growth of crypto business in India.
“We welcome the move from the RBI to clarify the stand around the old circular which was set aside by the honorable Supreme Court. I hope the confusion around the same ends now,” said Sumit Gupta, CEO & Co-Founder, CoinDCX. “We also respect the concern the banks may have around AML policies and discussions around the same will make the industry stronger, and investors and investments safer,” Gupta said.
“RBI’s statement to banks on cryptocurrency investments clears their position on whether customers are legally allowed to invest in crypto,” said Ashish Singhal, CEO, Coinswitch Kuber.
Till the government forms a national regulation on this asset class, it will be risky for any bank to do this. They will not have the backing of the regulator in case of any downside.
Essentially, the RBI has told banks not shoot from the its shoulder.
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