India’s central bank clarifies regulations as local banks avoid crypto

The Central Bank of India has officially announced that local banks are reportedly warning customers against using cryptocurrencies like Bitcoin (BTC).

The notice released on Monday indicated that the Reserve Bank of India is aware of media reports that certain banks have warned their customers about crypto by referring to the three-year-old RBI circular.

“Such references by banks / regulated entities to the above circular are inappropriate as this circular was overturned by the Hon’ble Supreme Court on March 4, 2020 in relation to the written petition,” stated the notice in which the circular said highlighted is no longer valid and cannot be quoted.

However, banks and other regulated financial institutions can still conduct customer due diligence processes related to anti-money laundering and know your customers’ standards under the Money Laundering Act 2002, according to the RBI.

The RBI’s statement is in response to media reports claiming some of India’s largest banks, such as HDFC Bank and State Bank of India, have warned their customers not to trade digital currencies. Some users claimed that HDFC Bank cited RBI’s 2018 order to ban crypto trading in India. The ban was officially lifted by the Supreme Court of India in March 2020.

The news adds to the prevailing uncertainty surrounding the legal status of crypto in India. Earlier this year, anonymous sources claimed the government was planning a general ban on crypto.