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Reserve Bank of India : Crypto Exchanges and Traders Are Free to Use Banking Channels

After the Supreme Court of India overturned a ban that prohibited the country’s bank from providing services to companies and individuals in the crypto industry, the eyes of the world were pointed at the country to see how this would affect the market there.

The world’s second most-populated country has long been considered the new frontier for the crypto industry, as it’s 1.3 billion people who have historically been quick to adopt new technologies and push for innovation in the financial sector. 

However, as more than two months have passed since the historical decision that deemed the ban “unconstitutional,” the Reserve Bank of India (RBI), the country’s national bank, was mostly silent on the issue.

That is, until last week when the bank officially answered a Right to Information (RTI) query. According to a report from the Economic Times, the query was submitted by B.V. Harish, the founder of Unocoin, a leading cryptocurrency exchange in India, on Apr. 25. Harish asked whether or not the RBI prohibited any banks from providing bank accounts for cryptocurrency exchanges, companies, or traders. 

Less than a month later, on May 22, the RBI responded to the query with a short and concise answer, saying that all banks were free to provide services to people or entities dealing in cryptocurrencies.

“As on date, no such prohibition exists,” the RBI replied. 

Screengrab showing part of the RBI’s reply to the RTI query filed by B.V. Harish. (Source: Twitter)

The Economic Times has reviewed RBI’s response and found it valid, but neither RBI nor any other major Indian banks have responded to queries from various other media outlets. 

According to Harish, the answer to the query effectively gives green light to companies in India who have been stuck in a legal limbo following the overturning of RBI’s ban two months ago. While the Supreme Court said that preventing persons or entities dealing with cryptocurrencies from attaining banking services was illegal, traders and companies have reported that banks continued to impose restrictions on crypto trade despite the ruling. 

A new RBI circular, similar to the one issued in 2018 which effectively enacted the ban, was necessary in order to greenlight operations in the country, Harish told the Economic Times. 

“Bankers have been saying that they need new RBI circulars, mentioning that there are no more restrictions for them to provide bank accounts for crypto businesses. Now, we have received a positive response from the RBI.”

Despite not being what some would deem “official,” the RBI’s response has put the issue of cryptocurrencies in India under the spotlight again. If the RBI was to comment further on the matter or issue a new circular as suggested by Harish, it could lead to massive growth in the country’s crypto and blockchain sector. 

A poll conducted in April showed that that the majority of the people that have at least some understanding of cryptocurrencies have invested in Bitcoin and believe cryptocurrencies could be a path to financial freedom. 

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