What does the RBI’s latest circular on cryptocurrencies mean?
Many banks warned their customers against dealing in cryptocurrencies for any transactions recently. Soon after that the Reserve Bank of India (RBI) Monday stated that banks and other regulated entities cannot cite its April 2018 order on virtual currencies (VCs). RBI said that April 2018 order on virtual currencies (VCs) has been set aside by the Supreme Court of India in 2020.
As per the notification sent by the central bank to banks “In view of the order of the Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,”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’s decision came after State Bank of India and HDFC Bank advised their customers not to deal with virtual currencies such as Bitcoin citing the April 2018 order of the RBI. These Banks also informed customers that if they fail to adhere to the advisory, their cards may be cancelled or suspended.
RBI also added 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 Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances”. It simply means that banks can’t take any action against their customers for dealing with cryptocurrencies following the court and RBI directives.