The Reserve Bank of India (RBI) recently recommended that the banks and other financial institutions should continue to work diligently with the customers who deal with virtual currencies /cryptocurrencies.
RBI Refutes Media Reports After Supreme Court Order
The recommendation from the RBI to the banks and financial institutions comes after some media reports claimed that the banks were cautioning their customers against cryptocurrencies. The banks were reportedly citing orders from the RBI.
However, RBI issued a statement and said that the order against the cryptocurrencies does not stand valid as the Supreme Court had put it aside. In a circular released on Monday, RBI said that they have noticed that some banks and regulated entities have cautioned their customers against virtual currencies via media reports. These reports further make reference to the RBI circular issued on April 6, 2018.
However, these references are not in order as the RBI circular issued in 2018 was set aside by the Supreme court on March 4, 2021.
The RBI circular further added that since the Supreme Court order, the previous circular (2018) is not valid and shall not be cited or quoted.
RBI Urges Banks To Continue Their Work With Cryptocurrencies
In the circular, RBI has also asked the banks and other financial institutions to continue to work with the customers who use cryptocurrencies. However, the banks must work diligently within the lines of regulations and 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, (PMLA), 2002.
Furthermore, the central bank has also advised financial institutions to ensure compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances while undertaking due diligence of customers.
Meanwhile, CEO and Co-founder of crypto exchange CoinDCX said that the RBI’s broader concerns and the banks’ worries are actually more about money laundering. And the way to make the industry safer and stronger in the long run.
