Indian central bank says its earlier ban on crypto no longer valid but urges due diligence

By Staff Reporter

1 June, 2020

The Reserve Bank of India (RBI), India’s central bank, said that its earlier banking ban on cryptos no longer valid as it has since been overturned by the Supreme Court, according to a circular issued on 30 May, 2021.

The apex said that its circular dated 6 April, 2018 was set aside by the Supreme Court on 4 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“As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from,” the circular said.

The demand for Indian cryptocurrencies has been booming according to media reports but concerns remain due to the Supreme Court’s earlier ban on cryptocurrencies with some banks such as HDFC and the State Bank of India refusing to offer banking services to crypto investors.

The latest circular aims to clarify the regulations governing cryptocurrencies by reminding banks that the previous bank ban on cryptocurrencies is no longer valid and that it had been overturned by the Supreme Court’s ruling of March 2020.

However, RBI said that banks may continue to carry out proper due diligence in line with the 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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