The Reserve Bank of India (RBI) has made clarifications about its regulatory policies on cryptocurrencies transactions in the country. The Bank issued the circular in response to media reports about commercial banks warning users about cryptocurrency transactions. The circular drew a reference to the issuance of a notice in 2018 made by the RBI.
The Bank has attempted to clarify the speculations that cryptocurrency transactions in the country were outlawed in the country. RBI however has suggested that financial institutions should be cautious in crypto transactions and carry their customers along. It was earlier reported in May that the Indian government was considering placing regulations on the use of cryptocurrencies instead of actually banning them.
RBI Calls for Due Diligence in Virtual Currency Transactions
The circular issued on May 31 and directed to all payment systems and financial service providers in the country has clarified that the earlier issuance in 2018 was no longer valid. According to the statement, references by financial institutions to the initial circular are no longer in order as the Hon’ble Supreme Court has set it aside on the 4th of March 2020.
It is therefore noteworthy that banks, fintech and payment service providers in the Asian country should quit citing the circular as a valid case. The Reserve Bank of India has stated the banks can continue to carry out customer due diligence according to the regulations of governing standards.
According to the circular signed by the Bank’s Chief General Manager, Shrimohan Yadav, the continuation of these transactions should be in accordance with Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT), and as well in compliance with relevant provisions under the Foreign Exchange Management Act (FEMA) for cross-border remittances.