Circular prohibiting invalid crypto: RBI

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CHENNAI: In a positive move for (virtual) cryptocurrency investors and related businesses, the RBI on Monday told banks to stop citing its April 2018 circular to deny services to those who trade cryptocurrencies because the same thing was overturned by the Supreme Court. The RBI has asked banks to continue to do due diligence on its clients’ cryptocurrency-related transactions.
The latest RBI circular comes after private banks and payment gateway platforms suspended services to customers who dealt in cryptocurrencies such as bitcoin.
“It has been brought to our attention by media reports that some banks / regulated entities have warned their clients against virtual currency (VC) transactions by referring to the RBI circular dated April 6, 2018” , said the central bank. He added that the reference to the circular is not admissible because it was overturned by the Supreme Court.
Banks had continued to cite the circular following the government’s lack of clarity on the legal value of venture capital and had suspended banking services to clients who dealt in cryptocurrency trading. The RBI’s April 2018 circular prohibited regulated entities from trading in CVs or providing services to facilitate any person or entity in the processing or settlement of CVs. The RBI’s attention was drawn after letters from banks began circulating on social media.



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