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Top Banks Still Averse to Letting in Crypto Trade

Exchanges hopeful, may explore legal means if payment ban stays

Sachin Dave & Saloni Shukla


Top banks are reluctant to let cryptocurrency exchanges and traders open accounts, despite the Reserve Bank of India (RBI) clearing the air on Monday that payment services cannot be denied on the basis of an earlier regulatory ban that was struck down by the Supreme Court in 2020.

Leading institutions such as SBI, HDFC Bank, Axis Bank and ICICI Bank have told various crypto exchanges that services related to crypto trades are unlikely to be resumed immediately.

For a month now, several banks have told customers to refrain from using bank accounts to buy cryptos and directed payment gateway operators to shut off net banking for merchants. This, amid a perception that RBI is not comfortable with virtual currencies. Bankers gathered the impression in the course of their interactions with RBI officials.

Some exchanges, however, are hopeful that smaller banks may step in to do business with them. “This is what happened after the 2020 Supreme Court ruling. Small banks came first, then the larger banks,” said an industry person.

Still Not in Black & White

Under the circumstances, crypto exchanges may cut a deal to access the application programming interface (API) protocol of mid-sized banks to enable seamless fund movement between bourses and investors. Access to API would allow automatic debit and credit of funds.

However, for larger lenders, RBI’s recent circular is more of a technical clarification which, according to them, does not quite put things in black and white. RBI did not come out with any guideline after the apex court set aside the regulatory ban imposed in 2018.

A lawyer advising banks said, “RBI has simply told banks to stop referring to the 2018 circular. The larger banks would try to sound out RBI before opening the doors to the crypto industry… banks feel there is an informal diktat from RBI to stay away from cryptos and that has not changed.”

There are close to 1.5 crore crypto investors in India holding digital assets worth Rs 15,000 crore.

SBI, HDFC Bank, Axis Bank and ICICI Bank did not respond to emails from ET.


Cryptocurrency exchanges, on the other hand, think the RBI directive would help in lifting the payment restrictions and is the first positive step towards regulatory recognition of the industry.

“We expect banking services to resume immediately since crypto trades are conducted through digital banking channels,” said Shivam Thakral, chief executive, BuyUcoin.

According to Sumit Gupta, chief executive and cofounder, CoinDCX, the exchange is in talks with banks and hopes to see smoother systems soon.

If the banking industry continues to clamp down on payments, crypto exchanges and their industry lobby may explore legal options. “We will be forming a committee to discuss our next moves, including legal options, if need be,” said Monark Modi, founder and chief executive, Bitex.

Exchanges that reached out to their banking partners were either told to wait for a few weeks or did not receive a response. “We are very vigilant towards all these developments and keep ourselves apprised with all legal and compliance advice,” said Ashish Mehta, cofounder, DigitX.

Even banks which allow services for crypto trades will try to sense the regulatory mood before giving API access to exchanges.

“While we will comply with the directive on AML (antimoney laundering) and KYC (know your customer) guidelines on dealing with cryptorelated customers and transactions, we have decided not to share our API protocol with crypto exchanges; the transactions will continue on RTGS and NEFT platform,” said one lender. Fund transfers on RTGS and NEFT platforms require exchanges to manually tally payments for every investor.

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