Fintech Lawyers, a law firm that represents cryptocurrency traders, has asked the government and the Reserve Bank of India (RBI) to direct banks to allow transactions in cryptocurrencies.
The request comes in the wake of the recent Supreme Court order that struck down the central bank’s April 2018 circular that disallowed banks and regulated entities from facilitating trade in cryptocurrencies.
“Ïn most of the cases the banks have not given any written communication but verbally informed their customers that they are waiting for RBI notification in this regard,” Mohammed Danish of Fintech Lawyers said in a letter to the Union finance secretary and the RBI. Mails to RBI for comment remained unanswered.
Sathvik Vishwanath, cofounder of Unocoin said, “ I don’t think RBI is instructing the banks to support the crypto industry. They are not obligated to do so as per the Supreme Court verdict.”
Bankers on conditions that they not be named told ET that lenders would open their channels for cryptocurrency trade only on explicit regulatory orders from either the central bank or the parliament, as the legality of such trades is yet not clearly defined in India.
“We will be guided by RBI’s directions on the matter and once we get clarity we will act appropriately. As banks, some of the concerns we had on cryptocurrencies were around security, use of money and traceability,” a senior banker said.
Another senior banker said the capabilities of domestic banks would be tested in allowing such trades. “The banking system including the regulators are yet to come up with a sound supervisory mechanism to govern cryptocurrencies,” the executive cited above said on conditions of anonymity.
Meanwhile, RBI is also said to be in the process of filing a review on the verdict with the Supreme Court on the grounds that the anonymous nature of crypto trades poses a systemic risk to India’s banking system, as reported by ET earlier.
The Supreme Court order was issued on March 4 following which many Indian cryptocurrency exchanges have enabled rupee deposits and withdrawals on their trading platforms. Following the April 2018 circular, banks had stopped supporting accounts of cryptocurrency exchanges and exchanges had instead switched to a peer-to-peer model to facilitate trade.
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