ICICI Bank exits from cryptocurrency trading platforms, should you worry?

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With the regulatory maze surrounding cryptocurrencies yet to show any signs of clearing up, ICICI Bank has decided to stop offering services to cryptocurrency exchanges. According to media reports, the bank has told some of the payment gateway operators to stop net banking facility for merchants trading in cryptocurrencies directly or indirectly. Payment gateway firms act as a facilitator for transferring funds from a customer’s bank account to the exchange.

On March 4, 2020, the Supreme Court set aside a RBI circular issued on April 6, 2018 which banned cryptocurrency trading in India. The RBI had asked all the banks that were providing such services to exit the relationship within three months with the cryptocurrency trading platforms.

Since then the uncertainty over the future of cryptocurrencies, including Bitcoin, has grown manifold as the bill on cryptocurrencies is being finalised. Moreover, RBI and SEBI do not have any legal framework to directly regulate cryptocurrencies.

“It is important for ICICI to clarify why they have taken this decision inspite of the latest March 2020 Supreme Court mandate that provided banking access for the crypto industry,” said Vikram Subbraj, co-founder and CEO of Giottus Crytocurrency Exchange.

Lack of clarity

“Indian crypto exchanges are currently self-regulated and follow extensive KYC processes similar to that of national banks. We even follow further compliance mechanisms such as advanced crypto transaction monitoring. It is sad that we continue to face such issues from reputed banks. It will be good for the industry if RBI can come out with a statement reiterating the supreme court judgement and resolve this issue once and for all.”

Exchanges look to reach out to government

Several big cryptocurrency exchanges of India are looking to jointly reach out to regulators and government departments on the need for positively regulating virtual currencies. The white paper jointly prepared by the seven exchanges states the need to regulate the use of cryptocurrencies in India, whether as an asset or a medium of exchange. The full presentation has been prepared around global regulatory practices, a proposed code of conduct and the potential consequences of a blanket ban.

There are currently over 10 million crypto users in India with an estimated value of Rs 1,000 crore.