The Reserve Bank of India has issued a statement informing certain banks and regulated entities that its April 2018 circular, which had banned banks from supporting crypto transactions, should no longer be used to warn clients about trading in virtual currencies.
RBI noted that the circular hasn’t been valid since the Supreme Court ruled against it in March last year, and so cannot be referenced or quoted.
In the much-needed clarification that was issued on Monday, the central bank noted banks should still continue carrying out the due diligence process prescribed under existing regulations.
WazirX’s Founder and CEO, Nischal Shetty, welcomed RBI’s clarification and stated: “We are looking for some guidelines from the government to further help the industry go forward in the right direction. It’s a positive step. Until today, many banks were unsure about the RBI’s stance on the previous 2018 circular. Now that the RBI has defined it, banks should have much more certainty.”
Is this a sign that Indians can now begin to invest in cryptocurrency? Answer is both yes and no.
Banks are citing an outdated 2018 circular to restrict cryptocurrency trading, according to the RBI, although banks must decide for themselves whether or not to allow consumers to trade.
However, the Reserve Bank of India has still not approved cryptocurrencies, and has simply said that their circular shouldn’t be used to discourage it. The clarification has been issued because banks like HDFC Bank and SBI sent out emails to its clients advising them against crypto trading citing the circular, which was in violation of Supreme Court’s ruling.
However, the fact that the central bank’s statement is impartial, does indicate that India’s attitude on cryptocurrency is softening a bit.
It comes at a pivotal moment in the country’s cryptocurrency trading, as the government is drafting guidelines to either ban or regulate cryptocurrency trading; the latter option is preferred by the majority of cryptocurrency traders and exchanges operating in the country, including Coin DCX, WazirX, and others.