India Says Banks Cannot Restrict Crypto Transactions

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India’s central bank, the Reserve Bank of India (RBI), has resolved confusion around a letter that was sent to bank account holders.

Indian Central Bank Clarifies Policy

On Friday, two of the largest banks in India, HDFC and SBI, sent notices to account holders which warned that cryptocurrency transactions “aren’t permitted as per RBI guidelines.”

The banks cited a document published by the RBI in April 2018, which ordered that “entities regulated by the Reserve Bank shall not deal in [cryptocurrencies] or provide services for facilitating any person or entity in dealing with or settling [cryptocurrencies].”

Now, the RBI has clarified that the guidelines are no longer valid. The country’s Supreme Court reverted the order on Mar. 4, 2020, ruling in favor of Indian crypto investors and overturning the ban.

“The circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,” RBI wrote.

Under current rules, banks are only allowed to carry out “due diligence processes” in order to uphold the anti-money laundering laws and other anti-terrorist financing laws.

India Hasn’t Banned Crypto

Uncertainty around India’s crypto regulations has created plenty of confusion. Most recently, in March 2021, it was reported that Indian regulators were considering a comprehensive ban on cryptocurrency.

There have been many other reports of a ban on crypto in the past, but none are official to date. Today’s directive from the apex bank suggests that regulators are not inclined towards stricter regulations.

Disclaimer: At the time of writing this author held Bitcoin and less than $15 of altcoins.

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