Indian central bank clarifies regulations as local banks shun crypto

Banks like HDFC and the State Bank of India reportedly cautioned customers against crypto, citing the RBI’s quashed crypto circular.

India’s central bank has issued an official notice regarding the fact that local banks are reportedly cautioning customers against using cryptocurrencies like Bitcoin (BTC).

Published Monday, the notice points out that the Reserve Bank of India is aware of media reports that certain banks have cautioned their customers against crypto by referring to the RBI’s quashed, three-year-old circular.

“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Supreme Court on March 4, 2020 in the matter of Writ Petition,” the notice reads, emphasizing that the circular is no longer valid and cannot be cited.

However, banks and other regulated financial institutions can still carry out customer due diligence processes related to Anti-Money Laundering and Know Your Customer standards under the Prevention of Money Laundering Act of 2002, the RBI noted.

The RBI’s statement comes in response to media reports claiming that some of India’s largest banks, like HDFC Bank and the State Bank of India, have cautioned their customers against dealing in digital currencies. Some users claimed that HDFC Bank cited the RBI’s 2018 order banning crypto trading in India. The ban was officially overturned in March 2020 by the Supreme Court of India.

What Is This @HDFC_Bank @HDFCBank_Cares @pushpendrakum @CryptooAdy @pankjtanwar @CryptoPointHi @cryptokanoon @CryptooIndia pic.twitter.com/rAK9guLGs7

— Rinku Saini (@RegaFlick) May 28, 2021

The news adds to the prevailing uncertainty regarding the legal status of crypto in India. Earlier this year, anonymous sources claimed that the government was planning a blanket ban on crypto.