India’s central bank, the Reserve Bank of India (RBI), has confirmed that there is no longer any banking ban on crypto exchanges, companies, or traders.
This follows the Supreme Court decision to quash the RBI circular prohibiting banks from providing services to any customers dealing in cryptocurrencies. The ban lasted for almost two years.
The RBI responded to a Right to Information (RTI) request that there is currently no banking ban on the crypto industry.
The RTI query was filed on April 25 by B.V. Harish, co-founder of Unocoin, a major Indian cryptocurrency exchange. He asked whether the RBI has “prohibited any banks from providing the bank accounts for crypto exchanges, companies or crypto traders.” The RBI replied on May 22: “As on date, no such prohibition exists.”
- Part of the RBI’s reply to the RTI query filed by Unocoin co-founder B.V. Harish. Image courtesy of B.V. Harish.
After several hearings, the Supreme Court of India quashed the RBI circular which banned banks from providing services to anyone or any businesses dealing in cryptocurrencies in March. The circular was issued in April 2018. Soon after the court’s verdict, cryptocurrency exchanges began bringing back INR support after about two years without it.
Nonetheless, some banks are reportedly still refusing to open accounts for crypto exchanges, claiming that they are waiting for further instructions from the RBI regarding cryptocurrency. “Bankers have been saying that they need new RBI circulars mentioning that there are no more restrictions for them to provide bank accounts for crypto businesses,” Harish was quoted by the Economic Times as saying.
“Now, we have received a positive response from the RBI.” However, the central bank is not obligated to inform commercial banks of the supreme court’s ruling. The RBI also previously confirmed that cryptocurrencies, such as bitcoin, are legal in India.
After the banking restriction was lifted, several cryptocurrency exchanges began seeing 10X trading volumes and a substantial increase in new users. While economists have predicted the worst recession ever for India, the crypto industry is booming despite the extended nationwide lockdown. Peer-to-peer (P2P) marketplaces for bitcoin are growing in India, new crypto exchanges are launching and new investments are flowing in.
Meanwhile, the Indian government is still discussing ways to regulate cryptocurrency; the process has been delayed due to the coronavirus crisis and the nationwide lockdown.