The Reserve Bank of India (RBI), India's national bank, has announced that crypto exchanges, companies, and dealers are no longer barred from banking. This comes after the Supreme Court overturned the RBI circular forbidding banks from providing services to customers who trade in cryptocurrency. The prohibition lasted nearly two years.
The Reserve Bank of India (RBI) has now confirmed that there would be no banking ban.
In response to a Right to Information (RTI) request, the Reserve Bank of India verified that there is currently no banking prohibition on the crypto business.
B.V. Harish, the co-founder of Unocoin, a large Indian cryptocurrency exchange, filed the RTI request on April 25. He wanted to know if the RBI had "prohibited any banks from providing bank accounts for cryptocurrency exchanges, firms, or traders." On May 22, the RBI responded:
As of now, there is no such prohibition.
The RBI circular banning banks from providing services to anyone or any company dealing in cryptocurrency was invalidated by the Supreme Court of India in March after many hearings. The circular was published in April of this year. After the court's decision, cryptocurrency exchanges began to reinstate INR support, which had been missing for nearly two years.
Despite this, some banks are apparently refusing to issue accounts for cryptocurrency exchanges, alleging that they are awaiting additional instructions from the RBI on the subject. The Economic Times reported Harish as stating, "Bankers have been insisting that they need new RBI circulars mentioning that there are no more constraints for them to create bank accounts for crypto firms." "The RBI has now responded positively to our request." The central bank, on the other hand, is not required to notify commercial banks of the supreme court's decision. The Reserve Bank of India has previously stated that cryptocurrencies like bitcoin are lawful in India.
Following the lifting of the banking prohibition, several cryptocurrency exchanges saw 10X trading volumes and a significant rise in new customers. Despite the lengthy statewide shutdown, the crypto business is growing, despite economists predicting India's worst recession ever. In India, peer-to-peer (P2P) bitcoin markets are expanding, new crypto exchanges are emerging, and fresh investors are pouring in.
Meanwhile, the Indian government is still debating whether or not to regulate cryptocurrency, a process that has been slowed by the coronavirus outbreak and a statewide lockdown. The Indian government and the central bank were said to be exploring methods to regulate cryptocurrency in March.