Indian banks have allegedly been quite slow to accept the Supreme Court’s decision that allows them to do business with cryptocurrency companies. India’s leading private bank, Kotak, has allegedly become the first to open its gates to the crypto community, according to a report published in Economic Times.
The banking behemoth said that it has partnered with the leading cryptocurrency exchange WazirX which would enable traders to use the banking services to liquidate their funds whenever they want. The partnership between the two institutions is being seen as a breakthrough for the cryptocurrency community given that Indian banks have frozen crypto payments and withdrawals for the last eight months.
One of the people familiar with this matter stated:
“WazirX has opened an account with Kotak which can be used to receive and pay money to investors trading on the exchange. The account is yet to become operational. Paperwork, KYC, and some testing are on.”
All the private banks in India have refused to do any business with crypto platforms citing a lack of clarity on regulations. They were mostly found using non-valid circulars from the Reserve Bank of India (RBI) to deny services. Kotak and WazirX never responded immediately to requests for comments.
Buy Bitcoin NowWazirX Partners With Kotak To Breach Banking Ban
The RBI circular in question goes back to 2018 when the Indian Central Bank ordered the banks to avoid offering any of their services. That circular was later disqualified by the Supreme Court in March 2020, allowing banks to provide their services, nonetheless, it had minimal to no impact on Bank’s real behavior.
The CEO of the industry lobby IndiaTech.org, Rameesh Kailasam, explained why these banks refuse to provide their services even after the Supreme Court ruling:
“Post RBI clarifying to banks in May this year that they cannot cite the 2018 order as it was set aside by the Supreme Court, banks were free to engage with the cryptocurrency ecosystem. Since then banks have been permitted to engage provided they undertake necessary due diligence processes around KYC, AML, CFT, PMLA, FEMA, besides looking at their financial health and risk exposures. Hence banks who have done this homework would typically be free to engage with the industry.”
The most recent partnership between a leading Indian crypto exchange WazirX and popular banking giant Kotak also points toward positive crypto regulations in the making. The government is expected to discuss the crypto bill during the continuing winter Parliamentary session. Various industry insiders indicate that the government is seeking to regulate digital assets as an asset class instead of imposing a widespread blanket ban.
