After ICICI Bank, IndusInd Bank exits from cryptocurrency trading platforms

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The cryptocurrency maze has turned into a labyrinth now. After ICICI Bank, IndusInd Bank has decided to stop offering services to cryptocurrency exchanges. The timing of withdrawal has raised many questions as the Supreme Court last year in March set aside the Reserve Bank of India (RBI) circular dated April 6, 2018, which banned cryptocurrency trading in India. In the absence of any further clarification from RBI, cryptocurrency exchanges have requested the regulator to clear its stance on whether banks in India can service the crypto industry or not.

Vikram Subbraj co-founder and CEO of Giottus Cryptocurrency Exchange, “This is true, they have stopped providing services to crypto entities stating they are taking a call. The Supreme Court judgement of March 2020 made it clear that banking access for crypto entities has to be afforded. Even after such clarity, we are unsure why or how banks are taking a stance against crypto entities.”

ICICI Bank did not reply to questions on why the bank decided to shut off services to exchanges.

“Many banks still quote the 2018 RBI circular, which was quashed by the Supreme Court, and point out that they have not yet received any official communication from RBI post that,” said Subbraj.

The banks have asked payment gateway operators to stop net banking and other services for merchants trading in cryptocurrencies directly or indirectly. “ICICI Bank and IndusInd Bank have stopped offering us services. HDFC Bank and Kotak Mahindra Bank were already not offering services to exchanges. When the Supreme Court has uplifted the ban, there is an urgent need for clarification from RBI,” said a CEO of the exchange who did not want to be named.

The uncertainty about the future of cryptocurrencies has grown manifold. With the sudden withdrawal of services and no clarification from RBI, the crypto investors are left wondering about the future of their investments. Many fear it might be the indication of things to come. Earlier RBI governor Shaktikanta Das on March 25 said it has “major concerns” on the cryptocurrencies traded in the market and has conveyed the same to the government.

Underlining that both the government and the RBI are “committed to financial stability”, Das said there are no differences between the central bank and the Finance Ministry on the matter, and “we should now await the final decision on the matter” from the Centre.

The comments came in light of what has been termed as confusing signals from the government on cryptocurrencies. After announcing its intent to completely ban such currencies, which are very volatile in nature without any underlying principle guiding its values, the government had shown some openness to such currencies like Bitcoin.