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Reserve Bank of India gave clarity on the 2018 Cryptocurrency circular.

Reserve Bank of India gave clarity on the 2018 Cryptocurrency circular

Reserve Bank of India clarifies the 2018 cryptocurrency circular asking banks to carry out their customer due diligence. The process should be carried out in line with regulations governing standards for KYC, anti-money laundering, combating of Financing of terrorism, and obligations of regulated entities under the prevention of money laundering act 2002.

Banks started Warning Customers.

The circular came shortly after major Indian banks started warning customers against using their services to trade in cryptocurrencies. However, RBI and the government have not formed any opinion on cryptocurrencies. Several Indians have taken exposure into the Crypto market already.

RBI Clarification

The RBI clarified that banks and other regulator entities could not cite its 2018 circular on cryptocurrencies. This is because the Supreme Court of India set the circular aside in March 2020. HOWEVER, the RBI also added that the circular is not valid from the date of the Supreme court order and hence cannot be cited or quoted.

Foreign Exchange Management

Banks also should ensure compliance with relevant provisions under the foreign exchange management act for Overseas remittances. Nischal Shetty is the co-founder and CEO of WazirX. He said that doing due diligence on a business is what banks do for all businesses. However, he added that this notification clarifies that RBI hasn’t asked any banks to stop their services.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.