In a recent response to a Right to Information query, the Reserve Bank of India, the Indian central bank, has stated that there is no prohibition on banks to provide bank accounts to cryptocurrency traders. But some banks have been arbitrarily denying services to crypto users and are still doing so. If there is no law banning crypto trading, as emphasized by India’s Supreme Court, and there is no prohibition on banks by the RBI, then why aren’t banks treating crypto-related activities on par with other legitimate activities?
The RBI banking ban on crypto was set aside by the Supreme Court on March 4, 2020. In its detailed judgement of over 180 pages, the Supreme Court stated that the RBI action is extremely disproportionate in severing the lifeline (banking services) for cryptocurrency trading business despite crypto trading not being illegal under any Indian law and no harm or damage is proved to have been caused to these banks as a result of their relationship with crypto exchanges. Thus the judgement, without speaking any good or bad about cryptocurrency, rendered the legality of crypto back to its erstwhile status as it was before the RBI’s ban: a state of regulatory vacuum.
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