The controversial position of the Central Bank of India hindered the activities of companies related to the crypto industry. What is the situation now and how does it affect the world of crypto?
Position of the Central Bank of India
The Reserve Bank of India (RBI) finally issued its position paper on financial services to crypto companies. The RBI explains that there are currently no restrictions or prohibitions on banks to serve their related customers.
The reply of the Central Bank of India to the request made by Harish BV, co-founder of the Indian crypto exchange, ‘Unocoin’, opens the door for private entrepreneurs or large companies to operate in the crypto industry in the country.
An RTI was filed by @bvharish Co-founder of Unocoin.
Question: Does RBI prohibited any banks from providing the bank accounts to crypto exchanges or crypto traders ?
Answer from RBI: As on date no such prohibition exist.
Great, now you can show this RTI to your bank. pic.twitter.com/n5iqGCSQtd
— Crypto Kanoon (@cryptokanoon) May 24, 2020
Supreme Court decision
In 2018, the Central Bank of India limited all regulated entities (including banks) to contacting organisations or entities engaged in crypto transactions. Following the ban, many companies and traders in the industry ceased operations or their accounts were suspended.
2 years later, the situation improved as the Supreme Court lifted the RBI ban at the beginning of March this year, but it was no longer certain whether banks could serve clients related to crypto-scrapers. Apparently, some banks continue to refuse to provide their services to digital content related companies.
Local attorney fintech Mohammed Danish stated that the Supreme Court ruling did not include notification by the RBI to the banks of the lifting of the ban, making the situation uncertain.
Harish BV, in order to clarify the concerns of entrepreneurs, submitted a request to the financial supervisory authority in April asking whether banks are still prohibited from making their services available to companies and traders related to crypto.
In response, the RBI wrote: “as of today, such a ban does not exist”.
Cryptocurrencies available for the whole of India
As of the date of the RBI’s response, the cryptic market had opened up to over 1.3 billion people throughout India. Most of the startups after the restrictions of 2018 registered in countries with regulations that are crypto-friendly, still operating from India, but once the RBI’s position is understood and the rules are transparent and official, the crypto and blockchain industry can grow again in India.
After the Supreme Court has lifted the ban, no company associated with these industries will register outside India, and their number will certainly increase dramatically in the coming years. We can expect that the development of the crypto in India will start in full swing as soon as information spreads across the country.