SynopsisIn 2018, the Indian government and the Reserve Bank of India had issued several warnings against dealing in cryptocurrencies, including Bitcoins. The government had even compared those with Ponzi schemes.
Mumbai: Two years after top banks stopped dealing with cryptocurrency exchanges and their customers on the central bank’s direction, the two sides are now back in business, according to four people with direct knowledge of the matter.
Top banks including State Bank of India, HDFC Bank, Yes Bank and ICICI Bank have started allowing customers to use bank accounts on cryptocurrency trading platforms, they said.
Also, these banks are reaching out to cryptocurrency exchanges and offering them several facilities. The banks did not respond till press time Thursday to ET’s queries.
These banks had suspended several accounts held by major Bitcoin exchanges and companies in 2018.
They had sought additional collaterals from the promoters initially, but eventually stopped lending to them all together.
In 2018, the Indian government and the Reserve Bank of India had issued several warnings against dealing in cryptocurrencies, including Bitcoins. The government had even compared those with Ponzi schemes.
The RBI had warned investors of virtual currencies over potential economic and financial risk and stated that it had not given any licence to any company to operate or deal in Bitcoin or any other virtual currency.
In March 2020, the Supreme Court quashed RBI’s circular paving way for cryptocurrency exchanges to restart operations.
Top cryptocurrency exchanges have seen a jump in their trading volumes in the last few months as the price of Bitcoins went through the roof — its price rose to as much as $20,000. Exchanges including CoinSwitch, CoinDcx, ZebPay, WazirX and Unocoin allow trading only through banking channels on their platforms.
“We do not allow cash transactions on our platform, and everyone must have a bank account. This has become seamless in the last few months,” WazirX chief executive Nischal Shetty said.
As the exchanges saw large volume and with no precise clarity on regulations around cryptocurrency in India, banks are now offering services to the trading companies.
“…in the last few months, top Indian banks are reaching out to us for working capital or other loans and financial requirements,” said Shetty.
According to a banker, his bank was dealing with some “select” cryptocurrency exchanges, but was cautious this time around.
“Allowing consumers to trade on these exchanges is safer, as we can monitor that; we are more cautious with the companies,” he said. “We haven’t lent to any company yet, as far as I know, but even if we do, that would be at higher rates and would require additional collaterals.”