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Indian cryptocurrency holders and users may finally exhale a sigh of relief as the RBI issued a statement objecting to banks utilizing an outdated circular to refuse crypto payments. According to the Reserve Bank of India, the circular in question is “no longer valid” and should not be “cited or quoted from.”
The Reserve Bank of India reported that the Supreme Court has overturned its 2018 circular in the case of the Internet and Mobile Association of India v. Reserve Bank of India. It went on to say:
“As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.”
RBI vs. Crypto
Following a warning to crypto holders in 2017, the Reserve Bank of India restricted firms under to its supervision from trading with virtual currency. This prohibition resulted in the loss of numerous crypto users’ accounts with various banks, as well as the closure of several crypto businesses, such as Zebpay. However, crypto supporters contested this ruling, and the Supreme Court overturned it, finding it ‘unconstitutional.’
In its decision, the Supreme Court characterized the RBI’s anti-crypto industry order as lacking in “proportionality.” Despite this, many private banks continued to refuse to accept crypto transactions, producing day-to-day problems for businesses and traders.
A statement from HDFC bank read:
“We have observed that your account reflects probable virtual currency transactions, which aren’t permitted as per RBI guidelines.”
“To comply with the regulatory guidelines (RBI vide guidelines DBR.No.BP.BC.104 /08.13.102/2017-18 dated April 06, 2018), the banks are advised to exercise due diligence by closely examining the transactions carried out in the account on an ongoing basis”
Many users took to social media to question the RBI and the banks.
— Rinku Saini (@RegaFlick) May 28, 2021
The central bank has now formally given Indian crypto users the go-ahead to utilize cryptocurrency without regard for whether it is an infraction or unlawful.
India as a crypto market?
We may expect a surge in users when Indian crypto consumers and companies gain clarification on trading crypto within the nation. This would not only help the country’s developing crypto space, but it would also result in an additional $12.9 billion in income for the Indian economy.
With that in mind, the crypto space has a long way to go in India. Earlier this year, the central bank reportedly sent informal guidance to financial institutions which demanded them to steer clear of crypto exchanges and companies. This led many banks to withdraw their services from these companies, forcing crypto exchanges to stop accepting Indian National Rupee [INR] deposits from users.