RBI Says Banks cannot Restrict Crypto Transactions

The Reserve Bank of India has reversed the ban on cryptocurrency transactions. On Friday, it was a notice sent to the bank account holders that clarified “crypto transactions aren’t permitted as per RBI guidelines”.

In addition, the referred document in the notice ordered that “entities regulated by the Reserve Bank shall not deal in cryptocurrencies or provide services for facilitating any person or entity in dealing with or settling cryptocurrencies”.

However, India’s Supreme Court reversed the order on March 4, 2020, and ruled in favor of cryptocurrency. As a result, RBI has overturned the ban, clarifying that the guidelines are no longer valid. The statement from RBI said, “The circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from”.

The ban on cryptocurrency transactions was to uphold the anti-money laundering laws and other anti-terrorist financing laws. However, under current rules, banks can only carry out the due diligence processes for the same.

India hasn’t Banned Crypto

Multiple attempts to ban cryptocurrency in India have created a lot of confusion for the investors. Although none of these attempts are official as of now, they sure have created uncertainties in the Indian crypto investors. Most recently, in March 2021, a report said that Indian regulators were considering a comprehensive ban on cryptocurrencies. Whether that ban will be carried out or not, is still arguable. All that uncertainty somehow questions the stability of cryptocurrencies in the Indian market.

Also Read: Regulatory crackdown in China leads traders to turn to OTC desks