RBI Advise Banks To Verify KYC in Cryptocurrency Transactions and clarified that its 2018 order on virtual currencies is not valid as it has been set aside by the Supreme Court of India in 2020. The clarification is issued to banks and other financial entities. Additionally, the reserve bank has asked banks to carry out the necessary customer due diligence process as per the extant 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.
Crypto exchanges like WazirX, Zebpay etc. have appreciated the Reserve Bank of India’s clarification and hope that it will encourage banks to process the crypto trade and provide banking access to Indian crypto exchanges.
Still, the RBI has not made it clear whether Cryptocurrency Transactions are valid medium of exchange or not. The government’s stance on this issue is also not clear. The government has proposed to present a Bill to regulate cryptocurrencies called The Cryptocurrency and Regulation of Official digital currency Bill, 2021. The Bill has provisions to make any dealings in cryptocurrency illegal. But there is no clarity yet on when this Bill will be introduced in Parliament.