India's cryptocurrency community breathed a sigh of relief on Monday night when the central bank clarified that cryptocurrency trading is not banned in the country. The Reserve Bank of India has told commercial banks not to use the 2018 central bank notice as a reason to block cryptocurrency transactions, as the Supreme Court of India has revoked the order. But banks must continue to take other normal due diligence measures on these deals.
Financial institutions including SBI Cards & Payment Services, one of India's largest credit card issuers, and HDFC Bank, the country's largest private bank, have warned customers not to trade virtual currencies.
Indian government officials have said they plan to legislate against cryptocurrencies and penalize those who trade them or even hold them. The new law will give cryptocurrency holders six months to liquidate such assets. The news triggered a sharp drop in bitcoin.
"Investing in cryptocurrencies has always been 100% legal in India, and the RBI's new circular clearly confirms the right to do business with cryptocurrency companies," said Avenash Shekhar, co-CEO of Indian cryptocurrency exchange platform Zebpay. He added that the clarification would attract more investors into the virtual currency space.