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RBI shows green light to banks over servicing digital currency businesses

Clarity has been provided by India’s central bank over the legal status of banks servicing digital currency related entities in the nation.

According to a report, The RBI has addressed the current ban on banks servicing the sector in a statement and noted that “no such prohibition exists”.

The RBI reportedly released such a statement shortly as a response to the Right to Information Act query which got filed by Unocoin co-founder BV Harish.

Harish queried the RBI on April 25thin regard to if or not it was legal for banks to continue its digital currency businesses. The RBI on April 2018 directed banks towards not dealing in virtual currencies or offering services to facilitate any entity or person from dealing or settling in the same. The RBI at that time supposedly believed that the servicing of digital currency-oriented businesses includes a significant amount of risk too and hence it decided that it was best for banks to not service digital currency businesses.

India’s Supreme Court in March 2020 overturned the RBI’s previous ruling which prohibited banks from servicing digital currency businesses. Further the Supreme Court ruling provided banks with the permission to service digital currency-oriented businesses, however, certain banks operating out of India as well as many of the digital asset companies said that the Supreme Court ruling somewhere made it whether or not it was legal for digital currency businesses to receive banking services.

When Harish received a statement from the RBI on May 22nd, it was then clear that no such banking ban on digital currency-oriented businesses existed in India.

Harish reportedly suggested thatsince now they have received a positive response from the RBI, bankers have been asking for the new RBI circulars which must mention that there are no restrictions on them in terms of providing bank accounts for crypto businesses

Multiple banks have been requesting for new guidance from the RBI before they got assured about the legalization in regards with servicing digital currency businesses. Since now that Unocoin’s RTI query got answered, banks seem to be confident enough about servicing businesses in the digital currency sector without thinking about the legal issues.

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