Mumbai: In a major relief for cryptocurrency investors in country, the Reserve Bank of India (RBI) has told banks that they cannot refer to its April 2018 circular to warn against investments into cryptocurrency and deny cryptocurrency services.
The clarification comes as media reports suggested that certain banks and regulated entities have cautioned their customers against dealing in virtual currencies (VCs) by making a reference to the RBI circular DBR No.BP.BC.104/08.13.102/2017-18 dated April 6, 2018.
"As such, in view of the order of the Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from," the RBI notification said.
It, however, suggested that banks as well as other entities addressed above, may continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), anti-money laundering (AML), combating of financing of terrorism (CFT) and obligations of regulated entities under the Prevention of Money Laundering Act, in addition to ensuring compliance with relevant provisions under the Foreign Exchange Management Act for overseas remittances.
The 2018 circular of the central bank had said that in view of the associated risks, entities regulated by the RBI shall not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling VCs.
Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/sale of VCs.
"Regulated entities which already provide such services shall exit the relationship within three months from the date of this circular," it had said.