India: RBI Governor Shaktikanta Says Concerns on Crypto Remain Unchanged

RBI Governor Shaktikanta Das told reporters at an online press conference that there is no change in RBI’s position on crypto trading in India. He said this after the monetary policy statement, adding that they have significant concerns around cryptocurrency, which they have conveyed to the government.

India’s Position on Virtual Currencies

This is a reiteration of the central bank’s long-standing stance against virtual currencies in India.

When questioned on how crypto investors in India should view the purchase of these assets, he said that the central bank doesn’t give investment advice. Each investor should make their appraisal and take a careful and prudent call on their investments.

Setting the Record Straight

Das’ statement comes just days after The Reserve Bank of India told Indian banks to stop referring to its April 2018 trading ban to prevent crypto transactions.

The order, which the Supreme Court struck down in February 2020, can’t be cited or quoted from, though banks must continue with other routine due diligence measures on the deals.

Das said that they had to set the record straight. That particular circular of RBI has been set aside; therefore, it is not valid.

The central bank has expressed concern about digital currencies on several occasions, citing money laundering and terrorism financing issues. The regulator banned banks and other regulated entities from supporting crypto transactions about three years ago, but the Supreme Court overruled that ban last year.

Das said the RBI couldn’t advise investors about their decisions and that each one needs to take a “prudent call” and do their diligence.

It was reported on May 31 that leading Indian financial institutions were clamping down on customers using bank accounts for cryptocurrency transactions. Over a couple of months, lenders like HDFC Bank and SBI Card sent notices to many customers who bought cryptocurrencies, warning them of curbs, including the permanent closure of accounts.

Abiding by Regulations

Das had made a similar statement during an interview in February. He expressed the central bank’s concerns about the unrestricted use of virtual currencies and its effects on India’s financial stability. He also said that the government was aware of the RBI’s position on cryptocurrencies.

In its latest circular, issued on May 31, the central bank also asked regulated financial institutions to continue carrying out due diligence under rules set forth. These include checks on combating the financing of terrorism rules, know your customer (KYC), anti-money laundering, and compliance with Foreign Exchange Management Act (FEMA) guidelines for overseas remittances.