Such references to the circular by banks or regulated businesses are not appropriate, according to RBI, because the circular was overturned by the Supreme Court on March 4, 2020.
The RBI issued a clarification on Monday, stating that banks or businesses cannot reference its 2018 decision prohibiting them from dealing with virtual cryptocurrencies. This is a great relief for cryptocurrency investors. Following various media reports indicating that certain banks are advising consumers against trading in virtual currencies by citing the RBI's April 6, 2018, regulation, the RBI issued a statement.
The order, according to the RBI, is no longer valid. "Such references to the aforementioned circular by banks or regulated organizations are not in order," the top bank stated in a statement. "This circular was set aside by the Hon'ble Supreme Court on March 04, 2020."
It stated that, as a result of the Supreme Court's judgment, the RBI's 2018 circular is no longer effective as of the date of the court's decision on the subject, and so cannot be referred or quoted from.
Several commercial and public sector banks, including HDFC Bank, State Bank of India, and others, cautioned and rejected digital currency exchanges' services, according to investors who cited the RBI's old circular. These banks had also allegedly warned that accounts trading in cryptocurrency will be suspended.
"This is a huge step forward for the entire business. There was a lot of uncertainty among banks about whether they could serve their industrial clients. This notice makes it quite apparent "According to The Economic Times, Nischal Shetty, the founder and CEO of WazirX, said. He also sent a copy of the RBI's official circular on the subject.
WazirX, India's largest crypto exchange, called it "good RBI news."
The RBI statement said banks and other commodities can, notwithstanding, " continue to carry out account due to assiduity processes in line with regulations governing ethics for Know Your Account (KYC KYC),Anti-Money Laundering (AML AML), Combating of Funding of Terrorism (CFT CFT) and arrearages of regulated commodities under Prevention of Croesus Laundering Act, (PMLA PMLA), 2002, in addition to cinching compliance with apposite bread under Foreign Exchange Management Act (FEMA FEMA) for overseas remittances."
Source : Business Today
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