The Reserve Bank of India (RBI) has issued a circular to banks and other regulated entities. This circular clarifies that its 2018 circular on crypto currencies is no longer valid as it was set aside by the Supreme Court in March 2020.
“As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,” said the circular from the central bank.
This is in response to users being warned by banks to avoid cryptocurrencies citing the circular. Many leading banks in India were reportedly misleading their customers. RBI’s name was thrown around several times while denying transfers to crypto exchanges.
To recall, in 2018, the Supreme Court had quashed a circular that barred RBI-regulated entities from “providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies”.
The Supreme Court quashed this circular. The contention was that the RBI had not banned virtual currencies. The Indian government too had not yet concluded on the legality of crypto currency. As a result of this the informal ban placed by RBI does not hold merit.
Celebration for crypto exchanges
Cryptocurrency exchanges like WazirX, Unocoin, Giottus, among others, have been adversely affected by the informal ban from the banks’ side. The new circular by RBI brings great joy to the exchanges.
Nischal Shetty, the founder and chief executive officer (CEO) of WazirX, welcomed the news.
“This document is a ray of hope for the Indian crypto ecosystem. We really appreciate the Reserve Bank of India’s clarification on this,” he said.
Further, Shetty said that he hopes this will allow his company to access banking services again. “We hope that this circular encourages banks to update their compliance teams and provide banking access to Indian crypto exchanges,” he said in a statement to Business Insider.
Sumit Gupta, co-founder and CEO of CoinDCX, “We welcome the move from the RBI to clarify the stand around the old circular which was set aside by the honorable Supreme Court. I hope the confusion around the same ends now. We also respect the concern the banks may have around AML [anti-money laundering] policies and discussions around the same will make the industry stronger, and investors and investments safer.”