According to a report published in the Economic Times, Kotak, India’s largest private bank, is now the first to open its doors to the crypto community.
Indian banks were reluctant to acknowledge the Supreme Court’s order permitting them to conduct business with cryptocurrency companies.
The banking titan formed a partnership with WazirX, the top crypto exchange. That will allow users to liquidate their funds using banking products and services. Additionally, the Indian banks have been freezing crypto payments and transactions for the past eight months. As a result, the alliance between the parties involved is being hailed as a great discovery for the cryptocurrency market.
As a result of crypto’s unstable market, banks refuse to work with it
Private banks in India have rejected the possibility to work with crypto platforms due to the absence of regulatory clarity. As well, these crypto platforms were using invalid Reserve Bank of India (RBI) circulars to reject services.
“WazirX has opened a bank account with Kotak, which maybe used to receive and disburse money to WazirX investors”. The account is about to be activated. “Paperwork, KYC, and some testing are in the works,” one source familiar with the situation stated.
The RBI directive in concern issued in 2018, and it instructed banks to refrain from providing such services. The Supreme Court later nullified the circular in March 2020, allowing banks to resume their activities. Yet, it had next to no effect on bank activity in the real world.
“The government is considering regulating digital assets”
“RBI clarified to banks in May this year that they shouldn’t mention the 2018 order because the Supreme Court has excluded it. Hence, banks were free to integrate with the cryptocurrency ecosystem”. Rameesh Kailasam, CEO of the industry lobby IndiaTech.org, explained why banks refuse to offer their services despite the Supreme Court ruling. Kailasam went on to say, “Since then, banks have the permission to engage. If they follow the requisite KYC, AML, CFT, PMLA, and FEMA due diligence processes. As well as assessing their own financial health and risk exposures. As a result, banks which have completed their due diligence are usually free to participate with the industry”.
The recent agreement between WazirX, one of India’s major crypto exchanges, and Kotak, a prominent banking powerhouse, also suggests that beneficial crypto rules are on the way. During the ongoing winter parliamentary session, the Indian government expected to examine the cryptocurrency law. According to industry sources, the government is considering regulating digital assets as an investment market rather than enacting a total ban.