Fri. Mar 29th, 2024

Kotak, India’s leading private bank, has reportedly become the first to embrace the crypto community, amid a growing perception that cryptocurrencies could be ‘regulated’ and not banned in India.

“WazirX has opened an account with Kotak which can be used to receive and pay money to investors trading on the exchange. The account is yet to become operational. Paperwork, KYC and some testing is on,” a person aware of the matter told Economic Times.

He noted the banking giant has partnered with the leading crypto exchange WazirX in order to allow traders to use the banking services to liquidate their funds. The partnership between the two parties is being seen as a major breakthrough for the crypto community, given Indian banks have frozen crypto payments and withdrawals for the past eight months.

 

About a year ago, WazirX closed its account with ICICI Bank, India’s second-largest private lender following the RBI circular dating back to 2018 when the Indian Central Bank ordered banks to avoid offering their services.

The circular was later disqualified by the Supreme Court in March 2020, clearing banks to offer their services. However, it had little to no impact on banks’ actual behavior. More and more large banks, including HDFC Bank, Axis, and SBI restricted payments involving crypto platforms and vendors.

A bulk of WazirX’s business shifted to MobiKwik, a digital wallet and payment services company.

 

“Post RBI clarifying to banks in May this year that they cannot cite the 2018 order as it was set aside by the Supreme Court, banks were free to engage with the cryptocurrency ecosystem. Since then banks have been permitted to engage provided they undertake necessary due diligence processes around KYC, AML, CFT, PMLA, FEMA, besides looking at their own financial health and risk exposures. Hence banks who have done this homework would typically be free to engage with the industry,” Rameesh Kailasam, CEO of the industry lobby IndiaTech.org, explained why banks refuse to offer their services even after the Supreme Court ruling.

 

 

Industry insiders suggest that the government is looking to regulate digital assets as an asset class rather than imposing a blanket ban.

 

The latest partnership between one of the leading Indian crypto exchanges WazirX and popular banking giant Kotak also hints toward positive crypto regulations in the making. The Indian government is set to discuss the cryptocurrency bill during the ongoing winter parliamentary session.

Leave a Reply

Your email address will not be published. Required fields are marked *