Restrictions put up for cryptocurrencies trading through customer accounts as it is not permitted by the RBI
In further trouble for domestic crypto investors, many banks have started to formally warn them about virtual currency transactions being done through their bank accounts and have said it is not permitted by the Reserve Bank of India
Many crypto investors tweeted that HDFC Bank has sent them a cautionary email stating that their account reflects probable virtual currency transactions, which is not permitted by the RBI based on their 2018 circular.
SBI Card too has sent a similar advisory to customers and said that usage of credit cards for transaction on virtual currency merchant platforms may lead to suspension or cancellation of the credit card.
This comes after other banks too have been putting up restrictions for trading of cryptocurrencies through customer accounts and most large banks are not processing cryptocurrency related transactions any longer.
“The issue is that banks are regulated by the RBI. Without a formal direction on how to go about cryptocurrency transactions, most banks prefer to follow the RBI’s previous directive,” said a banking industry source.
According to another source, some banks are also asking customers to fill self declaration forms stating that they are not doing cryptocurrency related transactions.
While the Supreme Court had lifted the ban on trading of cryptocurrency in March 2020, there has been no formal order from the RBI on the issue.
Earlier in 2018, the RBI had issued a circular that entities regulated by it shall not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling virtual currencies.
The Finance Ministry had also proposed to bring a legislation to ban cryptocurrencies but it has been put off for now.
Meanwhile, crypto trading in the country is booming with exchanges registering a large number of sign ups and participation from investors and are launching new products.
In April 2021, domestic cryptocurrency exchange WazirX recorded a monthly volume of $5.4 billion.
Similarly, CoinDCX, has seen a year on year growth of 340 per cent in new user sign-ups and has moved from 1,50,000 to 4,00,000 in the last 15 months