The Central Bank of India, Reserve Bank of India (RBI) has officially advised banks that their banking ban circular is no longer valid as it was set aside by the country’s Supreme Court more than a year ago. Despite the Supreme Court’s decision, banks continue to cite the RBI circular when dealing with cryptocurrency.
RBI has asked banks to stop citing their ‘no longer valid’ circular on cryptocurrency
India’s central bank, the Reserve Bank of India (RBI) on Monday issued a notice clarifying its position regarding cryptocurrencies. The notice titled “Customer due diligence for transactions in virtual currency (VC)” is intended to be “all commercial and co-operative banks, payment banks, small finance banks, NBFCs and payment system providers”.
It has come to our attention through media reports that some banks / regulated entities have cautioned their customers against transactions in virtual currencies by referencing the RBI circular dated April 06, 2018.
April Circular Informed the banks that they were banned from transacting in cryptocurrencies. However, the Supreme Court of India Rejected The circular came back in March last year, allowing banks to resume providing services to crypto businesses, including cryptocurrency exchanges.
In its notice on Monday, RBI clarified: “Such references to the above circular by banks / regulated entities are not in order as it was circular. To cancel In the case of Writ Petition (Civil) No. 528 (Internet and Mobile Association of India v. Reserve Bank of India) dated 04th March, 2020 by the Hon’ble Supreme Court, “Detailed:
Thus, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the decision of the Supreme Court, and hence cannot be cited or cited.
The central bank said: “Banks, as well as other entities mentioned above, can continue to conduct customer due diligence procedures in line with regulations governing Know Your Customer (KYC), anti-money laundering (AML) standards. To counter terrorism financing (CFT) and obligations of regulated entities under the Prevention of Money Laundering Act, (PMLA), 2002, besides ensuring compliance with the relevant provisions under the Foreign Exchange Management Act (FEMA) for foreign remittances.
While the banking ban was withdrawn in March last year, some banks in India are still prohibiting crypto transactions. Some customers reportedly received warning emails from their banks stating that they were not allowed to use bank accounts or credit cards for crypto transactions.
Some media outlets also reported that the RBI informally Asked the banks To cut ties with crypto businesses and merchants. However, the National Payments Corporation of India has said Will not ban Cryptocurrency Transactions through UPI.
Meanwhile, the Indian government is still working on cryptocurrency regulation. A crypto bill was to be introduced in Parliament in the budget session, but it did not. Last month, the media reported that the government planned to set up a panel of experts To work on cryptocurrency regulation.
What do you think about the RBI’s explanation to banks regarding cryptocurrencies? Let us know in the comments section below.
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