RBI cryptocurrency: What does the latest RBI circular on cryptocurrency say?
What does the latest RBI circular on cryptocurrency say?
RBI cryptocurrency: The Reserve Bank of India on Monday issued a statement on bitcoin and cryptocurrency trading, advising banks not to warn customers against trading using the old order.
In 2018, the RBI banned banks operating in India from trading in cryptocurrencies. The ban was overturned by the Supreme Court in 2020.
In this context, the RBI has sent a circular to the banks warning some of the leading banks against the use of cryptocurrencies. It cited an RBI order issued in 2018 stating that consumers should not be warned and that the circular was no longer valid after the Supreme Court ruling.
State Bank of India and HDFC Bank have warned their customers not to trade in cryptocurrency in reference to RBI’s 2018 order and cards will be canceled if they fail to follow the advice. The RBI has no choice but to allow it after the Supreme Court lifted the ban last year. Thus the RBI intervened and asked the banks not to engage in such heinous activities. But cryptocurrency expert Hitesh Malviya said it raises many unanswered questions as to why banks did such an act in the first place.
Does this clarify the policy position for cryptocurrency users?
This report by RBI has given some relief to those who trade in cryptocurrency. As many Indians have invested in cryptocurrencies such as Bitcoin and Ethereum, the RBI's move has given them hope that their Rs 10,000 crore cash will not be affected.
The Reserve Bank of India (RBI) has reported that some banks and financial institutions have warned their customers against dealing with virtual currencies in the wake of the RBI's 2018 circular. It also said that the 2018 circular was canceled by the Supreme Court in 2020 and should not be complied with anymore.
What should banks do?
While the RBI order has reassured those who trade in cryptocurrency, it has suggested that banks and crypto sites should ensure that these transactions are not used for fraudulent transactions and tax evasion.
The Reserve Bank has asked banks to take the necessary steps to regulate the terms of your Customer Knowledge (KYC), Anti-Money Laundering (AML), Anti-Terrorism Financing (CFT) and the Duties of Organizations Regulated under Prevention. Banks have also been asked to ensure compliance with the relevant provisions under the Money Laundering Act, (PMLA), 2002 Foreign Exchange Management Act (FEMA). Banks cannot take action against virtual currency investors following orders from the Court and the Reserve Bank.
What is the position of the Reserve Bank?
Last April 2018, the RBI came up with malicious legislation on cryptocurrency. This made it impossible for banks and the financial sector to engage in any service related to cryptocurrency.
This is not officially accepted by the Reserve Bank as it is not possible to find out who is sending the money sent through cryptocurrency trading. Its transactions cannot be monitored by the Reserve Bank. The Reserve Bank of India has decided to ban cryptocurrencies, including bitcoin, in India for a variety of reasons.
On April 6, 2018, when the Reserve Bank issued its monetary policy, it announced a ban on cryptocurrencies, including bitcoin. The Reserve Bank of India (RBI) has ruled that financial institutions, including banks, should not have any relationship with organizations engaged in cryptocurrency trading, including bitcoin, and that banks operating under the Reserve Bank should not be allowed to sell or buy bitcoins by online money transfer companies. Ordered to stop all trading in cryptocurrency by an individual or private company within 3 months.
The Reserve Bank of India is preparing to launch its own digital currency. It plans to create a digital currency on behalf of the central bank. The RBI team is in the process of creating a new digital currency. The RBI team is reviewing the technology and procedures for how the central bank's digital currency will be launched and issued. Governor Shakti Kantha Das had recently said that the results on digital currency would be announced soon.
