Reserve Bank of India (RBI) Clarifies it Does Not Prohibit Banking Services to Crypto Exchanges

The Reserve Bank of India (RBI) has finally said that crypto-oriented businesses can access banking services within the country. This comes after a long silence since India's Supreme Court overturned RBI's crypto ban earlier in the year. Industry stakeholders are now optimistic that the 1.3 billion population could increase their market share in respective services such as crypto exchanges.

Notably, RBI's clarification was prompted by a question raised by Unocoin Co-founder, BV Harish, under the Right to Information (RTI) Act. Harish filed the RTI on April 25 seeking to know whether the RBI prohibits any banks from providing accounts to crypto exchanges or traders. The RBI responded on May 22 highlighting that it does limit such operations,

“As on date, no such prohibition exists.”

India's Confusion in Banking Services for Crypto Operations

Despite India's Supreme court lifting the ban on banking services for crypto businesses, the industry has been in an uncertain state. This is mainly because of the silence from the country's monetary authority, RBI. As soon as the Supreme court ruled against its crypto ban, the regulator signaled that it would appeal but it is yet to do so.

The RBI approach has in turn made banks to be skeptical in-service provision towards crypto entities. Speaking to the Economic Times, Harish said that banks want official communication from the RBI as to lifting the April 2018 prohibition,

“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.”

Nonetheless, crypto activity in India is gradually picking up as investors eye the potential 1.3 billion user market. Since the ban was lifted, the crypto sector has seen exchanges like CoinDCX and WazirX scale to new heights. CoinDCX for instance has had two successful funding rounds this year led by Polychain capital and is hopeful that the prevailing will continue to favor its growth.

Harish has since told Cointelegraph that a combination of the Supreme Court ruling and RBI's recent clarification are an indication of India's positioning as a crypto-friendly jurisdiction,

“After Supreme Court scrapping RBI's Ban on crypto and RTI’s reply from RBI, it is clear that there is no need for any blockchain or crypto company to register out of India.”