Kotak Mahindra Bank, a leading private bank in India, has struck a partnership with crypto exchange WazirX, the Economic Times reported.
Fast facts
- WazirX has opened an account with Kotak that can be used to pay and receive money from investors, according to the ET report. The account will be activated after the completion of all paperwork and formalities, the report said. Kotak is eyeing the growing Indian crypto landscape and is also in talks with other exchanges like ZebPay, the report added. WazirX did not respond to requests for comment at press time.
- In 2018, the Reserve Bank of India — the country’s central bank — banned all regulated financial institutions from providing services to crypto businesses. The ban was struck down by the Supreme Court in early 2020 which reduced the banking drought for crypto businesses, but both public and private banks have largely steered clear of crypto despite the apex court order. In May, the RBI clarified that banks may deal with crypto businesses as long as they conduct due diligence and comply with anti-money laundering laws and other regulatory obligations, but it did little to stir banks back into the crypto pool. Some banks like the ICICI Bank, the largest private bank, and State Bank of India, the country’s largest public sector bank, have even imposed their own bans to ensure their customers do not deal with cryptocurrencies.
- The banking drought in the Indian crypto space has been intensifying this year as most major banks have either pulled back or stayed away from crypto. Even last month, HDFC, Axis and ICICI banks sent emails to customers warning them about the risks of investing in crypto. This attitude of banks in turn has left crypto exchanges in the lurch, most of whom have been scrambling to provide payment options to users. Major exchanges like CoinDCX and WazirX resorted to payment wallets like MobiKwik for fiat currency transfers from investors for some time.
- Kotak’s partnership with WazirX is a significant development since it could mean that other banks may soon follow suit. The development comes at a time when the Indian government is outlining its crypto regulatory framework. The ministry of electronics and information technology released a National Strategy on Blockchain document late last week, but the crypto bill is yet to be revealed. The planned bill, which could reportedly classify crypto as assets but ban its usage for payments, is listed on the parliamentary agenda for the ongoing winter session but is yet to be called for discussion. According to an ET report, the bill will likely be examined by the union cabinet this week. Once the cabinet greenlights it, the bill can be introduced in parliament.
