India’s central bank has said that banks and other finance sector businesses should not cite a prohibition it imposed on lenders dealing in cryptocurrencies to justify their refusal to offer any crypto-related services.

Fast Facts:

  • In a circular dated May 31, the Reserve Bank of India noted that its ban on banks offering services linked to cryptos had been overturned by the Supreme Court in March 2020, and that it was no longer valid.
  • The RBI’s move comes after HDFC Bank and other finance sector businesses began issuing warnings to customers not to trade cryptocurrencies — in some cases threatening to suspend or close their accounts — sparking a backlash among bank customers.
  • Cryptocurrencies have been at the center of a regulatory impasse in India, with the RBI choosing to remind the banks of the overturning of its prohibition only 14 months after the court acted, and amid intense lobbying efforts by the crypto industry for government regulation instead of a blanket ban on crypto trading.