National Payments Corporation of India refuses to ban cryptocurrency trading, putting decision on whether to block trades in hands of lenders.
India’s national payments authority has handed banks the responsibility for deciding whether or not to ban cryptocurrency trading. The National Payments Corporation of India has advised lenders across the country to impose bans on cryptocurrency transactions based on the advice of their own compliance teams, the Economic Times reports.
The NPCI said it would not block cryptocurrency trades because the Reserve Bank of India had not issued a new directive following a March 2020 Supreme Court ruling that set aside an April 2018 directive by the central bank that banned banks and financial institutions from “dealing in virtual currencies or providing services to facilitate” anyone trading in cryptocurrencies.
Cryptocurrency exchanges have complained that banks and payment gateways have been blocking their digital currency transactions based on the overturned central bank directive.
Nischal Shetty, chief executive officer of cryptocurrency exchange WazirX, wrote on Twitter, “Confusion in India’s banking industry is hurting 1.5 CRORE [15 million] Indians in Crypto. The Honourable Supreme Court of India has set aside RBI crypto circular of 2018. Banks in India still cite that circular to deny banking. Request @RBI please clarify & help.”
The NPCI’s decision comes as almost half a dozen banks have instructed operators of payment gateways to blacklist businesses involved in cryptocurrency transactions. The banks are preventing customers from making online fund transfers using means as online banking and real-time payment system UPI to trade cryptocurrencies.