The Reserve Bank Of India clarifies the Banks, informing them that they cannot warn their customers against crypto trading concerning an older order.
In India, the existence of cryptocurrencies has met several challenges from big banking institution like the State Bank Of India and Hdfc, but on May 31, the Reserve Bank of India issued an order clarifying the banks that they cannot warn their customers against the crypto trading.
Trading in cryptocurrencies have been a subject of confusion and chaos in India and, this clarification would give them relief.
The Rise Of Cryptocurrency
This warning came to an existence owning the fact that a lot of interference have seen from banking entities that caution the customers against the cryptocurrencies, citing 2018 regulation. The bank used to notify their customer to reveal the nature of the cryptocurrencies they are dealing with. They also warn their customer to understand the risk and uncertainties associated with virtual trading by referring to the RBI circular DBR.No.BP.BC.104/08.13.102/2017-18 dated April 06, 2018.
Also, if a customer fails to clarify with the bank about his crypto trading, then the bank will close his/her account permanently.
Silver Lining For Crypto Investors
At the beginning of this year, there was news of the government planning to ban cryptocurrency in India. Even a bill was proposed in front of Union Budget 2021 for the same. Somehow the bill wasn’t passed further and, there were no developments made since then. The new clarification made by the RBI clear us that there will be no ban imposed on cryptocurrencies infact the government will soon come up with a plan to regulate the operation of cryptocurrencies in India.
In the past, several cases come out addressing the failure of withdrawals and deposit by these platforms. The banking system didn’t support the trading platform and, also, many times banks ended their ties with them, which restrict the investors from making a profit. The RBI clarification would deliver a message to the banks that, besides their choices, they have to gel well with the trading platforms.
There were a lot of rumour and negative notions among people towards virtual trading but, owing to the fact that RBI has finally chosen to speak on the matter, there will be a huge positivity seen in crypto trading. It will help to gain the confidence of the investors as well as revive the public interest in trading.
But the clarification also sends a message to both banks and the crypto platforms that these transactions are not subject to any fraudulent activities, both parties should keep this thing in mind.
Also concerning Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), the
government advised the banks to carry out the due diligence process of the customer.
There has been a tremendous increase of investors recorded in the trading of crypto. In the last few months, the trading in Dogecoin, Ethereum, and Bitcoin has increased in India, looking at these figures, the government has no choice but to interfere in between and to come up with a solid plan to regulate virtual trading.
So I guess in the coming time, you will get to hear a lot from the government regarding crypto trading because it seems like the government has finally awakened.