Cryptocurrency startups express relief as the Reserve Bank of India (RBI) removes the ban on them.
The RBI had, for a long time, maintained its stranglehold over cryptocurrency exchanges and startups in the country. It has also vehemently opposed crypto businesses and traders in the Supreme Court (SC). It even prohibited all financial institutions including banks from working with cryptocurrency companies.
In March, however, the RBI removed the ban after losing the legal battle in the apex court. And now, they have promised to desist from hindering the cryptocurrency businesses from plying their trade.
Banks allowed to work with crypto businesses
Since April 2018, RBI had prohibited all financial institutions working under it from partnering with cryptocurrency companies. Crypto traders and entrepreneurs expressed great displeasure over the severe measure, as exchanges formed the majority of the victims. Some of these crypto traders were even tempted to switch to peer-to-peer (P2P) trading while others had to lock down their crypto business.
Almost 2 years after, the apex court nullified the RBI order. While the lifting of the ban was welcome news, many cryptocurrency startups could not capitalize on the decision. This was because there was no clarity on whether cryptocurrency was a commodity, currency, or goods and services.
On April 25, not long after the SC ruling against the RBI, BV Harish, co-founder of Unocoin, filed a Right to Information (RTI) query. The query was concerning the crypto traders who complained that banks were still imposing restrictions on crypto trading despite the ruling of the apex court.
In a response to this inquiry, the RBI said on May 22, that “as on date, no such prohibition exists”. With this confirmation, it is clear that cryptocurrency traders would now be free to trade with banks in India.
Previously, Tim Draper, the influential VC investor from Silicon Valley, revealed plans to inject funds into Indian crypto startups. While talking to media during his visit to the country in March this year, he seemed very enthusiastic about the Indian crypto ecosystem. Also, recently Paxful conducted a survey on the subject of the crypto boom in the country.