The Reserve Bank of India (RBI) clarified its position concerning the previous ban on cryptocurrency-related activities in the country and the adherence of financial institutions to the rule.
The latest circular from the RBI quoted a 2018 memo in which the RBI declared a clampdown on crypto based on the Supreme Court’s directive. The RBI now claims that the older circular can no longer be referenced as it is no more valid based on the date discrepancies.
The new memo was specifically directed to the banks, financial institutions, and other regulated entities that withheld their crypto investors’ services while citing the RBI. Per this new development, the apex bank claims such references are no longer valid, and the older memo cannot be cited or quoted from.
The subject of privacy concerns and its potential use in financing terrorism is an unending topic amongst money regulators worldwide. While the RBI appears to have softened its stance per crypto transactions, the bank still wants maximal compliance measures to be applied to Know-Your-Customer (KYC) and other related measures. Per the memo, the RBI advised that banks may conduct the following activities:
“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.”
The move from the RBI comes after the global cryptocurrency industry started experiencing a downturn and a broad market correction. The ongoing bearish turn was sparked when Elon Musk’s criticism of Bitcoin mining and its energy usage rent the air. This was further compounded by the Chinese clampdown on crypto activities and miners alike. The RBI’s move may lend some succour to the global crypto market when it needs all positive news to retrace the current trend.
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