The Reserve Bank of India's decision to repeal a 2018 rule prohibiting banks from assisting cryptocurrency sales is a welcome respite for a community that has faced resistance from traditional lenders who are needed to settle these transactions.
Late Monday, the regulator warned banks from using a 2018 central bank circular to stifle crypto trades. The Supreme Court recently overturned the 2018 note, which prohibited banks from enabling such transactions. Other standard due diligence processes on the purchases must be continued, according to the RBI.
”As of the date of the Supreme Court order, the circular is no longer valid and so cannot be referred or quoted from,” the RBI stated.
The RBI order comes after allegations in the Indian media that financial organisations such as SBI Cards & Payment Services Ltd., one of India's top credit card issuers, and HDFC Bank Ltd., the country's largest private-sector bank, had warned customers against trading in virtual currencies. The Indian government has voiced worry that crypto assets could be used for illegal purposes like as money laundering and terrorism funding.
“Investing in cryptocurrency has always been 100 percent legal in India, and the recent RBI circular clearly affirms the right to do business with cryptocurrency companies,” said Avinash Shekhar, co-CEO of ZebPay, India's oldest crypto exchange. He went on to say that the clarity will encourage more people to invest in virtual currencies.
According to Sumit Gupta, CEO and co-founder of crypto exchange CoinDCX, the RBI's broader concerns and banks' concerns about money laundering should help stimulate rules and make the industry safer and stronger.
After gaining in the two previous sessions, Bitcoin, the most popular cryptocurrency, was barely changed as of 12:15 p.m. in Hong Kong on Tuesday.
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