By Solomon Odunayo
As a report has it, the Reserve Bank of India (RBI) has recently made its stance known on cryptocurrencies, stating that there is no ban on banking services for accounts that are connected to cryptocurrency.
In a notification letter passed across on 31st May 2021, RBI stated that banking institutions should carry out due diligence processes for customers that are dealing with digital currencies.
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The notification letter to banks reads as follows:
“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular DBR.No.BP.BC.104/08.13.102/2017-18 dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020 in the matter of Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.
“Banks, as well as other entities addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for 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), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.”
Over the past couple of weeks, a number of major banks in India have been warning their customers to desist from using their accounts for any crypto-related activities, citing the RBI’s circular from 2018.
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Howbeit, according to the central bank, the circular is no longer valid considering the verdict of the Supreme Court:
“As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.”
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