RBI’s recent response to an information request shows that Indian banks are not prohibited from dealing with cryptocurrency business.
India’s central bank, the Reserve Bank of India, seems to finally be clarifying its stance on financial services for cryptocurrency-related businesses.
In response to a right to information request, the RBI clarified that there are no restrictions on banks preventing them from providing an account to cryptocurrency companies or traders.
The request was initially filed by Harish BV, a cofounder of local cryptocurrency exchange Unocoin.
The Supreme Court’s decision on the crypto ban wasn’t the end
In 2018, the RBI released a statement restricting all regulated entities including banks from dealing with any organization or individual traders transacting in cryptocurrencies. After the ban, many companies and traders also received warning statements from their respective banks advising them to either stop their cryptocurrency activities or have their accounts suspended.
Things have since improved as in early March, the Supreme Court lifted RBI’s ban on financial entities from dealing with crypto-related customers.
However, uncertainties still abounded regarding whether banks could support accounts for such customers. Earlier this spring, some banks were reportedly still refusing services to crypto businesses.
Local fintech lawyer Mohammed Danish previously stated that the Supreme Court’s ruling on the ban did not include an order for the RBI to notify banks and request their compliance with the court order.
To clarify traders’ concerns as to why banking portals still prohibited transactions in virtual currencies, Harish BV filed an information request on April 25, asking the financial regulator if it still prohibited any banks from providing bank accounts to cryptocurrency companies or traders,
In response, the RBI wrote, “as on date, no such prohibition exists.”
Crypto is now open to 1.35 billion people
After RBI imposed the banking ban on cryptocurrencies, most Indian blockchain and cryptocurrency startups registered themselves in countries with crypto-friendly regulations while still operating from India. Some of the most established Indian crypto businesses were either forced to close shop or move to a different country.
Harish BV told Cointelegraph that now that the RBI’s stance is crystal clear, the blockchain and cryptocurrency industry can flourish in India, opening digital assets to 1.35 billion Indians:
“After Supreme Court scrapping RBI’s Ban on crypto and RTI’s reply from RBI, it is clear that there is no need for any blockchain or crypto company to register out of India.”