BackNow IDFC First Bank halts banking services to crypto industry
IAMAI has set up a board to oversee the implementation of a self-regulatory code of conduct for its members that lays down that all crypto exchange members will voluntarily comply with anti-money laundering laws, among others
PremiumNEW DELHI: Private sector IDFC First Bank Ltd is the latest lender to halt services to the cryptocurrency industry, which has been witnessing some normalcy in accessing banking services after the Reserve Bank of India (RBI) last month clarified that the 2018 circular directing lenders to stop dealing in virtual currencies was no longer valid.
According to industry sources, IDFC First Bank over the past week temporality stopped services, as it is doing enhanced due diligence regarding banking support to crypto exchanges.
Email sent to IDFC First Bank requesting comment remained unanswered till the time of publishing.
“IDFC Bank joins a few of the other nationalized banks that have taken the stance to not service cryptocurrency-based companies. While RBI has clarified its stance that the banks can provide services after their due diligence, it is abruptly insane for these banks to take their foot back. These kinds of reactions also alarm the investors of cryptocurrencies for the wrong reason," said Sathvik Vishwanath, co-founder and chief executive officer, Unocoin.
As per industry estimates there are over 15 million crypto investors in India, holding ₹10,000 crore worth in digital assets.
Lenders including, ICICI Bank, Yes Bank and Paytm Payments Bank, have already severed ties with the crypto sector.
HDFC Bank and the State Bank of India had also cautioned their customers against dealing in virtual currencies such as Bitcoin. This had prompted the RBI to release a clarification regarding its 2018 circular.
RBI had earlier informally told lenders to stay away from businesses dealing in cryptocurrencies, though there was no official communication in this regard.
According to industry sources, while there are still a few banks that have their reservations in offering services to the crypto sector, it is less aggressive now in terms of taking negative action compared to a few weeks ago.
“The root cause of the problem is the unregulated tag of the crypto industry in India. Since the industry is unregulated, it creates confusion among the services providers as there are no set guidelines. We need to address the larger policy issues to unlock the true potential of digital asset economy in India," said Shivam Thakral, CEO, BuyUcoin.
Meanwhile, in order to better comply with India’s laws, industry body, Internet and Mobile Association of India (IAMAI), has set up a board to oversee the implementation of a self-regulatory code of conduct for its members that lays down that all crypto exchange members will voluntarily comply with anti-money laundering (AML) or combating of financing of terrorism (CFT) and know your customer and other company and taxation laws.
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