Post RBI order regarding banning the regulated financial institution from dealing in cryptocurrencies, India’s biggest public sector bank has issued a notification stating that SBI prohibits trading cryptocurrencies among its customers.
“As per RBI, there are increasing concerns of consumer protection, market integrity, money laundering etc, caused by Virtual Currencies (VCs), also referred as cryptocurrencies and crypto assets. Hence, it has announced that with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or selling virtual currencies,” read the bank’s notification.
Basically, SBI prohibits trading cryptocurrencies due to its aim to ensure security for customers. It is mainly to be in line with the RBI policies. Post notification, the SBI card will not be permitted to purchase or trade cryptocurrency or any other virtual currency.
Meanwhile, earlier this year, the public sector bank had issued a notification warning about Bitcoin trading to its credit card customers.
The notification said, “given concerns, both globally and locally, SBI Card would like to advise you to be mindful of potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with cryptocurrencies and virtual currencies.”
Regarding the issue, the RBI will release a detailed notification. It has given banks a time period of three months. The time period is to settle businesses with entities and consumers dealing with cryptocurrencies. Leading Indian banks like Axis, ICICI and HDFC have stopped a number of cryptocurrency-related services with consumers and traders.
Across the world, banks like Capital One, Citibank, JP Morgan and Lloyds have already banned their customers and consumers from buying Bitcoin and other cryptocurrencies from their cards.
It has been reported by Inc42 that after some banks stopped their services to exchanges. Some of them have already closed down their businesses.
Post the RBI order, the Delhi High Court was approached by the Ahmedabad-based cryptocurrency startup Kali Digital EcoSystems. They were seeking writ petition against the order. So, the Delhi High Court issued a notice to the RBI, Ministry of Finance. Even to The Union of India through Secretary and GST council, a notice was issued.
The Supreme Court had earlier issued a notice to the Law and Justice, Ministries of Finance, IT, SEBI and RBI. It was done after receiving a plea filed by petitioner Dwaipayan Bhowmick. He was looking for a Bitcoin regulatory framework. In the petition, he asked for information about why there was a delay in the frameworks.
SBI Prohibits Trading Cryptocurrencies: Petition Against RBI’s Order
Many cryptocurrency enthusiasts have started an online petition against RBI. They have been taken aback as now even SBI prohibits trading cryptocurrencies. The petition asks the central bank to remove the circular. The petition, ‘Make India at the forefront of Blockchain Applications revolution’ has been filed under ‘Digital Assets Exchanges of India’ and has over 44,000 signatures.
Moreover, the barring has been passed mainly due to the occurrence of scams and risks like ‘Ponzi schemes.’
Finally, on December 2013, the RBI first notified warning traders and users about the risk involved in the cryptocurrency trading business.
Moreover, it is not much of a surprise that now even the largest public sector bank SBI prohibits trading cryptocurrencies. The ruling is predicted to affect businesses to a huge extent.