The Reserve Bank of India said on Monday that banks cannot refer to its April 2018 circular – struck down by the Supreme Court in 2020 — to caution customers about trading in cryptocurrency. For those who use your platform, what happens next?
It is definitely a welcome move. Until now, quite a few banks were not clear about RBI’s stand on the old circular of 2018. Now that the RBI has clarified it, that should bring a lot of clarity amongst the banks as well.
We have been talking to a lot of banks. They were on the fence on whether they could service the industry or not. The latest RBI notification makes it clear that the circular was set aside by the Supreme Court on March 4, 2020 and it asks banks to do due diligence. Due diligence is a welcome move because as an industry, all the exchanges already do the KYC/AML and all the things that are necessary before providing services. It is a very positive move for the sector.
How are you looking at the RBI circular in light of the upcoming law on crypto currencies that the government is set to bring?
The entire industry is waiting for the law. Recently there were reports that the government is trying to set up a new committee that would look at crypto all over again with the intention of looking at them as assets rather than currency. This again is something that as an industry we have been pushing for, because the majority of the crypto that exists today are classified as assets or utilities and not currency. That again aligns with what the crypto industry has been pushing for in terms of regulations in India.
Now combine that with the fact that in the last six months India has seen people entering crypto in millions. I think it is just a matter of time before positive regulations come in but before regulation, some guidelines could be set because it is going to take a while before regulations set in. We are looking for some guidelines from the government to further help the industry go forward in the right direction
A lot of users could not make transactions. Have you been able to fix all of that? Are you expecting a surge in traffic?
Week on week and the last two to three weeks have been tough for the industry due to the banking issues. In the next week or two, we will understand how many banks really open up to the industry. We have already started getting messages from different parts of the banking sector to clarify and understand this circular as well. In the next couple of weeks, we are going to see a lot of positive movement for the industry and from our product as well.
The banks have to update their compliance teams and provide the much needed access to the crypto exchanges as well as crypto holders. What kind of talks are going on?
One of the biggest hindrances was that they did not know what the RBI’s outlook would be. The latest notification clarifies that. The second was what sort of due diligence do crypto exchanges in India follow? What sort of compliance checks do exchanges comply with and work towards? We have been closely working with the different departments in various banks to show them how we do KYC/AML compliances and we will have to continue working towards that as an industry because this is an unregulated industry and it just becomes more important that we follow all the existing guidelines for the finance sector even if there are no regulations for the sector. It is important for us to follow these and as exchanges we are already doing that.
