India's central bank says there are no curbs for banks to serve crypto traders

India’s central bank says there are no curbs for banks to serve crypto traders

Written by Ruby Hinchliffe
28th May 2020

The Reserve Bank of India (RBI) has clarified its stance on banks providing accounts to traders dealing with virtual currencies, saying “no such prohibition exists” for banks to serve these customers, the Economic Times reports.

The central bank was responding to a Right to Information (RTI) query sent by Indian bitcoin processor Unocoin’s co-founder BV Harish, echoing concerns raised by a handful of traders that banking channels were still freezing out cryptocurrency firms despite changes in regulation.

According to Decrypt, RBI did consider filing a review petition to the court in order to change its mind

In March, a Supreme Court ruling overturned restrictions imposed by RBI on banks and cryptocurrency firms which had been in force since April 2018.

These restrictions had prevented all entities – mainly banks – regulated by the central bank from dealing in virtual currencies, and had also prevented them from providing services to facilitate any person or entity dealing or settling in them.

When these restrictions first came into force, it led to a series of local cryptocurrency exchanges shutting down, including Cryptokart, Zebpay, Koinex, and Coinome.

“RBI needs to show at least some semblance of any damage suffered by its regulated entities,” the court said in its ruling read upon lifting restrictions. “But there is none.”

According to Decrypt, RBI did consider filing a review petition to the court in order to change its mind, but this never happened.

“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. Now, we have received a positive response from the RBI,” Unocoin’s Harish told the Economic Times.

During the ban, several international exchanges moved into India. Binance bought Indian exchange WazirX last November, and in October South Korea-based Bithumb Global said it was propping up local operators with liquidity.

The new regulatory landscape means both the local exchanges which survived the ban, and new entrant international exchanges can finally tap the majority of India’s 1.3 billion population.