Does the CryptoCurrency Cloud finally have a Silver lining ?

-Dishita Sheth

The Reserve Bank of India (RBI) confirmed on May 31 that banks and other regulated entities cannot
cite its 2018 circular on cryptocurrencies because it was set aside by the Supreme Court (SC) in
March 2020. The RBI stated that the circular is no longer effective as of the date of the SC ruling and
that it cannot be referred or quoted from.

This clarification follows a series of previous investor communications from banks like HDFC and SBI,
which highlighted a 2018 circular to warn investors about the "uncertain regulatory landscape" in
this industry. Investors were urged to understand the nature of these transactions and to be mindful
of the hazards connected with crypto and virtual currencies.

The circular does, however, include a cautionary warning about banks performing due diligence in
cryptocurrency concerns. Banks were told to maintain complying with KYC (Know-Your-Customer)
and AML (Anti-Money Laundering) requirements, among other things.

“We welcome the move from the RBI to clarify the stand around the old circular which was set aside
by the honorable Supreme Court. I hope the confusion around the same ends now. We also respect
the concern the banks may have around AML (anti-money laundering) policies and discussions
around the same will make the industry stronger, and investors and investments safer." said Sumit
Gupta, CEO, and Co-founder, Coin DCX. 

Due diligence, on the other hand, is a legal requirement that all financial institutions must fulfil. All
of this leads to a bright future for the booming crypto business, which has been hampered by
ambiguous government policies and laws.

Despite the country's ambiguous cryptocurrency landscape, Indians have invested more than $1
billion in the cryptocurrency market, making India one of the top virtual currency trading countries.

Experts believe there is now a chance for substantial industry-government collaboration on crypto-
related policies. “this is very positive for the ecosystem and it feels like overall consensus within the
government and regulatory bodies is against stifling innovation and growth in the Crypto ecosystem
in India,” Sandeep Naliwal, Co-Founder and Chief Operations Officer at Polygon, an Indian blockchain
scalability platform, said.

When Mark Cuban of Shark Tank fame invested in Polygon, the company skyrocketed in popularity.
Polygon's native token, Matic, has risen in value from $26 million upon its start in 2019 to more over
$14 billion in recent months.

RBI’s statement to banks on cryptocurrency investments clears their position on whether customers
are legally allowed to invest in crypto. Instead of denying service to their customers based on an
invalidated circular, it is time banks came onboard the crypto investment bandwagon, allow the
crypto exchanges to hold accounts with them, and enable customers to make investments via all
possible options, including UPI and bank transfers. Cryptocurrencies are the future and we must
ensure we stay at the forefront of this technology”, emphasises Ashish Singhal, CEO, Coinswitch
Kuber.

With RBI’s consent and clearance on trading of cryptocurrency and an increasing number of
businesses and individuals embracing cryptocurrencies and the underlying blockchain applications,
formal regulation of the sphere is no longer a pipe dream. As the government strives for increased
financial inclusion and engagement, it is critical that a suitable environment be created to make this
possible.