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  • Writer's pictureGalactic Advisors

Relief for Crypto investors - RBI clarifies

Several reports have emerged of banks blocking crypto related transactions including deposits and withdrawals.

The Reserve Bank of India (RBI) has clarified in it's latest notification:

Customer Due Diligence for transactions in Virtual Currencies (VC) 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 As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.

What does the above mean?

The RBI has basically clarified that banks cannot block crypto transactions since the Supreme Court has already set aside the circular cited by banks.

We would expect banks to start allowing crypto withdrawals as well as deposits again soon.

The RBI also clarified that banks should follow their due diligence process:

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.

Overall, this is much needed relief for crypto investors in India. Hopefully, a new law regulating crypto transactions will be finalized soon to give everyone a much needed governance structure.

Are you a crypto investor and not sure about your compliances? Feel free to contact us. Our team of experts have developed a crypto compliance model where we handle all your compliances from end to end.


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