While the provision of bank accounts for cryptocurrency traders has been a contested issue, the Reserve Bank of India confirmed last week that there is no prohibition on banks in providing accounts to these dealers.
The confirmation came as a response to a Right to Information query filed on April 25th from unocoin co-founder BV Harish. As per the regulator’s statement, “no such prohibition exists”, reports Economic Times.
The affairs finds its roots back in April 2018 when a circular from RBI directed all banks under the regulator to not deal in virtual currencies or provide services to individuals and organisations dealing in cryptocurrency such as bitcoin. Banks were asked to exit existing relationships with dealers within three months after the circular was issued. The regulator’s moves were directed at a consistent effort towards opposing payment systems that undermined the integrity of the banking system.
But then, in a landmark judgement announced in March this year, the Supreme Court struck down the circular claiming it to “unreasonable” and thus declared it to be illegal. Following this, the issue perhaps remained a bit of a grey area for banks regulated by RBI. Traders wanted to clarify whether banking channels were still blocked for transactions in virtual currencies.
Harish’s query comes as a result of these complaints from traders claiming that the restrictions continue despite the apex court’s ruling. “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. Now, we have received a positive response from the RBI” said Harish.
While there have been many contentions for and against the use of virtual currencies, the entity seems to riding the wave through the pandemic. Bitcoin has shown considerable stability through the past couple of months.