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On the chaotic status of cryptocurrencies in India: how did we get here?

On Monday, the Reserve Bank of India issued a notification on virtual currencies or crypto-currencies and reiterated what it has been saying for over 8 years. It instructed banks to adhere to existing rules on money laundering, terrorism finance, foreign exchange management and Know-Your-Customer norms, when dealing with crypto firms. This was triggered by emails sent last week by India's leading banks to their customers, warning about the risks of investing in cryptos. While HDFC Bank asked customers to provide information as to the nature of certain transactions, SBI Cards and Payments warned its users against buying crypto-currencies on their credit card. Both banks said that if customers do not comply, they would take action. At the outset it is clearly not legally tenable to cite a circular, which was struck down by the Supreme Court last year on the grounds of "proportionality". The RBI said as much in its statement on Monday. It said: "the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from." But over the last three months, some of the lead banks have shut access to deposit and payments channels to crypto-exchanges. No one knows for sure what was said, or what was communicated to the banks by the regulator. But sources at banks and across crypto-exchanges have told MediaNama that it all started with the IPL - the Indian Premier League, the Cricket tournament. A complete low-down on crypto-currency regulation in India. The…

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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