Cryptocurrency transactions: HDFC Bank asks customers to ignore email after RBI clarification
Following the clarification from RBI, HDFC Bank has sent fresh emails to its customers asking them to ignore the previous mail and regretting the inconvenience caused
HDFC Bank has asked its customers to ignore an email, which was sent last week warning them about cryptocurrency transactions. The company earlier sent an email over the last weekend demanding them an explanation for trading in cryptocurrencies, citing a 2018 circular from the Reserve Bank of India (RBI). The bank warned customers of suspending or restricting their accounts in case of no explanation.
Post the outrage created about the status of cryptocurrencies, the Reserve bank of India (RBI) came out with a clarification on Monday that the circular issued by the regulator in 2018 is no longer valid from the date of the Supreme Court judgement. It also mentioned that the RBI circular cannot be cited or quoted while warning customers about their crypto transactions.
Background
Following the clarification from RBI, HDFC Bank has sent fresh emails to its customers asking them to ignore the previous mail regretting the inconvenience caused. “We wish to update you that in the light of the advisory issued by RBI…dated May 31, 2021, on ‘Customer Due Diligence for transactions in Virtual Currencies’, we request you to ignore our earlier communication dated May 28, 2021.”
After March 2020, this was the first time that banks sent written notices to their customers for cryptocurrency transactions last week. The banks were quoting the 2018 RBI circular pointing out that they have not yet received any official communication from RBI post that.
RBI’s initial missive on cryptos
On April 6, 2018, RBI directed that all entities regulated by it shall not deal in virtual currencies or provide services for facilitating in dealing with or settling the cryptocurrencies. Hence, all the banks that were already providing such services were told to exit the relationship within three months with the cryptocurrency trading platforms.
Apex court stance
On March 4, 2020, the Supreme Court set aside the RBI circular, which was issued on April 6, 2018, lifting curbs on cryptocurrency trading in India. After the Supreme Court order, several exchanges started offering crypto services again and in no time it emerged as a popular alternative investment avenue. But recently all banks stopped their API services to crypto exchange, as a result, exchanges have again been denied banking services. It is still to be seen if banks will resume their services after the recent clarification from RBI.