RBI’s reply on ban on dealing in cryptocurrencies after Supreme court’s order

written by ADMIN | June 2, 2021

A few month’s ago Supreme court had quashed the circular of RBI which was restricting dealing in cryptocurrency or virtual currency vide it’s order.

Later, while presenting budget 2021 in the parliament it was also said that a bill for cryptocurrency shall be introduced soon and RBI might bring it’s own cryptocurrency.

Looking at all this people thought that this is a positive news for all the people who have invested in cryptocurrency and various crypto exchange like WazirX who are operating in India.

Recently various media reports started coming out suggesting that banks are stopping their customers who are dealing or investing in cryptocurrencies and were quoting the earlier circular of RBI, to this RBI replied that such circular is no longer in existence after the order of Hon’ble Supreme court but banks have to still caution their customers and perform due diligence to understand whether no other non-compliance is being made while investing in such cryptocurrencies.

“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 As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.

2. 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.”

 

To read RBI’s full reply to media report CLICK HERE.