Customers of HDFC and SBI, two of the largest banks in India, have received an email notification from banks threatening to suspend or close the accounts of customers who engage in cryptocurrency transactions. Other banks have also asked their customers to complete declarations stating that they will not be involved in any crypto transactions.
In all their notification, banks are citing the RBI circular of the 2018 ban of crypto that was overruled by the Supreme Court in March 2020. Since then the RBI has made no formal announcement on the status of the ban. The Indian government is yet to take a stand on crypto regulations and according to a piece of recent news from leading media Economics Times, the Indian government is reconsidering its stance on cryptocurrencies with the formation of a new regulatory panel.
Indian Government cites very clearly that the earlier recommendations made by a committee headed by former finance secretary Subhash Garg in 2019 for a blanket ban on crypto-assets had become outdated and a fresh look is needed at the use of cryptos rather than a total ban. HDFC Bank also released a report saying that it was only a matter of time before Indian investors had legal access to cryptocurrency markets.
Also read - India reconsidering its stand on crypto ban
Not only this, but on May 6th, a leading news source in India reported that the National Payments Corporation of India (NCP) which runs UPI in India has refused to ban cryptocurrency transactions and has instead asked banks to take a call based on their risk assessment. And despite this RBI bullying Indian banks to cut ties with crypto businesses.
Customers in India have taken to social media to vent their frustration over the bank’s cautionary emails. Over the last few months, banks are seen continuously closing doors for crypto exchanges in India. This seems a clear indication that despite any formal circular from RBI, it is trying to bully banks not to work with crypto exchanges and warn customers not to deal with crypto in any manner.
This came out after the news broke by The Economic Times on Friday that the crypto exchanges are planning to ask the top court for a directive on whether the RBI can demand that lenders cease to provide payment services to merchants involved in cryptocurrency trading.
Not to mention that the crypto community in India has been very active in not just developing great products but has also been instrumental in helping society during these tough times. Crypto Covid relief fund that was started by Sandeep Nailwal, co-founder of Polygon, had collected over a billion dollars in funds from the crypto community including Ethereum co-founder and well-known person in the crypto industry Vitalik Buterin, who alone donated over a billion-dollar to the relief fund.
The RBI’s action in this matter is not just unthoughtful and but also shameful. We hope the supreme court and government take necessary action to resolve this before India misses the crypto revolution train.