Reserve Bank of India clarifies lift of crypto ban

The Reserve Bank of India has confirmed that crypto traders, companies and exchanges are allowed to open bank accounts

The Reserve Bank of India has confirmed that there is no banking ban on the cryptocurrency industry, in response to a Right to Information (RTI) request.

The RTI query was filed on the 25th of April by BV Harish. Harish is a co-founder of Unocoin, a major cryptocurrency exchange in India.

Harish forwarded a query asking whether the RBI had prevented any banks within the country from providing bank accounts to crypto traders, companies or exchanges.

On May 22, the RBI replied that “as of date, no such prohibition exists.”

The Supreme Court of India, after a number of hearings, struck down the RBI circular issued in April 2018 that prevented banks from providing services to people or businesses involved in cryptocurrencies last March. The court verdict marked the return of INR support for many cryptocurrency exchanges.

Despite that, there are reports that some banks continue to refuse opening accounts for crypto exchanges due to claims that they are waiting for further instructions from the RBI.

“Bankers have been saying that they need new RBI circulars mentioning that there are no more restrictions for them to provide bank accounts for crypto businesses,” Harish said.

“Now, we have received a positive response from the RBI.”

The lift on the banking restriction has led to a substantial increase in trading volumes and a rise in new users. While economists previously predicted that the lockdown across the country would bring about one of the worst recessions ever for India, the cryptocurrency industry is booming. Peer to peer marketplaces are thriving in the country, new crypto exchanges are setting up and new investments are flowing in.

The lift on the RBI ban was welcomed heavily on social media, with many tweeting #Indiawantscrypto and viewing the ruling as a victory. Wazirx Nischal Shetty, CEO of an Indian crypto exchange, believes that the new ruling is an opportunity for the country to participate in the blockchain revolution.

“Today’s a historic day for the entire Indian crypto ecosystem. This positive judgement will open doors to massive crypto adoption in India. It proves that we can now innovate, and the entire country can participate in the blockchain revolution.” Shetty said.

“I’m confident that this judgment will have positive impact on the global crypto ecosystem. This will lead to more startups in crypto in India. Hundreds of startups will be created. VC investment will activate in the sector. More jobs.” he added.

The Indian government is still discussing how it would regulate cryptocurrencies; however, the process has largely been delayed due to the pandemic and the nationwide lockdown.