RBI reiterates its 2018 cryptocurrency circular not valid – crypto wallet deposits could resume soon

• The Reserve Bank of India (RBI) has issued a circular asking banks to stop citing a quashed 2018 circular.
• Several banks have been using this circular to persuade their users against cryptocurrencies.
• Cryptocurrency exchanges have welcomed the decision.

The Reserve Bank of India (RBI) has issued a circular to banks and other regulated entities clarifying that its 2018 circular on cryptocurrencies is no longer valid as it was set aside by the Supreme Court in March 2020.

“As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,” said the circular from the central bank.

This is in response to users being warned by banks to avoid cryptocurrencies citing the circular. Many leading banks in India were reportedly misleading their customers, essentially misusing RBI’s name and its quashed circular to prevent their customers from using their money for an activity that is legal.

To recall, in 2018, the Supreme Court had quashed a circular that barred RBI-regulated entities from “providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies”.

The Supreme Court quashed this circular, stating that since the RBI had not banned virtual currencies, and that the Indian government has not arrived at a decision yet, the informal ban placed by RBI does not hold merit.

Crypto exchanges rejoice, say banking services should resume soon

Cryptocurrency exchanges like WazirX, Unocoin, Giottus, among others, have been adversely affected by the informal ban from the banks’ side.

Nischal Shetty, the founder and chief executive officer (CEO) of WazirX, welcomed the news.

“This document is a ray of hope for the Indian crypto ecosystem. We really appreciate the Reserve Bank of India’s clarification on this,” he said.

Further, Shetty said that he hopes this will allow his company to access banking services again. “We hope that this circular encourages banks to update their compliance teams and provide banking access to Indian crypto exchanges,” he said in a statement to Business Insider.

Sumit Gupta, co-founder and CEO of CoinDCX, “We welcome the move from the RBI to clarify the stand around the old circular which was set aside by the honorable Supreme Court. I hope the confusion around the same ends now. We also respect the concern the banks may have around AML [anti-money laundering] policies and discussions around the same will make the industry stronger, and investors and investments safer.”

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