RBI notification on crypto makes things easier for customers

RBI’s statement to banks on cryptocurrency investments clears the position on whether customers are legally allowed to invest in crypto, says Ashish Singhal, Co-founder and CEO, CoinSwitch Kuber. The RBI on Monday clarified that banks and other entities cannot cite its 2018 order on virtual currencies as it has been set aside by the Supreme Court of India in 2020.

“Instead of inconveniencing customers’ basis an invalidated circular, it is time banks came onboard the crypto investment bandwagon, allow the crypto exchanges to hold accounts with them and enable customers to make investments via all possible options, including UPI and bank transfers,” Singhal said.  “Cryptocurrencies are the future and we must ensure we stay at the forefront of this technology.”

The Reserve Bank of India said it has come to their customerattention 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 Honorable 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),” it said. “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.”

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The central’s banks latest directive comes against the backdrop of some banks and regulated entities citing the circular and cautioning customers against dealing in virtual currencies.