Indian central bank remains anti-crypto, affirming ‘no change’ in its stance

The Reserve Bank of India’s ban on banks’ dealings with crypto may be defunct but the institution remains apprehensive of — if not outright hostile to — cryptocurrencies.

Its infamous circular directing banks to cease servicing crypto firms may have been overturned in the courts but India’s central bank is showing no signs of softening its stance towards cryptocurrencies.

Reserve Bank of India Governor Shaktikanta Das reiterated the institution’s position in a recent press conference following a statement on monetary policy, stressing:

“We have major concerns around cryptocurrency, which we have conveyed to the government.”

The governor’s comments come after the Reserve Bank of India had been prompted to clarify that banks should not continue to cite the Reserve Bank of India’s now-defunct circular as grounds for refusing services to crypto firms. Recent media reports had suggested the document was still providing an alibi for banks reluctant to deal with entities from the crypto space, despite the fact that the Supreme Court had ruled the ban disproportionate and struck it down in March 2020.

Das told reporters that the central bank wants to “set the record straight” and  “that particular circular of RBI has been set aside. Therefore it is not correct to refer to that circular.” Despite its repeal, banks have continued to be reluctant to open up to the industry amid a general atmosphere of uncertainty regarding the future of crypto in India. This year, an anonymous source claiming to be a senior official in India’s Finance Ministry suggested a long-discussed blanket ban on cryptocurrencies may yet be implemented in the country.

While keen to clarify the status of the circular, Das emphasized that banks should continue to follow due diligence measures when it comes to dealing with cryptocurrency-related clients. The central bank has repeatedly pointed to the risks of money laundering and terrorism financing that it fears cryptocurrency usage can facilitate. In parallel, it has been exploring the possible need for a central bank-issued digital currency.