Cryptocurrencies have been around for around a decade now, however there have still been no signs of it gaining popularity with the governmental institutions and banks. The financial innovation is deemed to be unstable and highly volatile and governments usually discourage masses from making investments in such projects. The scams and the general mistrust associated with cryptocurrencies have not made regulating crypto a possibility either.
Recently it was reported that Digibank owned by major multinational financial services company DBS and headquartered in Singapore, the first ever digital bank in India, closed the account of a customer because it was involved in the trade of cryptocurrencies and related activities. The person whose account was closed was the Twitter user “Indian CryptoGirl”, who tweeted about the incident via a tweet. Two days before this event transpired the Indian CryptoGirl had tweeted about Kotak Mahindra Ban, the second largest private bank in India. Apparently the bank had been saddling the account holders with anti-crypto restrictions. Two days after The Indian CryptoGirl succumbed to a troublesome situation herself.
CryptoGirls tweet mentioned that Digibank froze her account because a few transactions were carried out between her account and that of a virtual currency traders. The bank also notified that her account would be closed after a 30 days period and that she will not be allowed to make any deposits in the account in question once closed.
Previously CryptoGirl had been using her account at the Kotak Mahindra Bank for carrying out cryptocurrency transactions, and rarely used the one in Digibank for the transfers. The user discovered the mail from Digibank, as she received multiple message from her following, inquiring if she had gotten any account closure notice by the bank. The email explicitly mentioned that the account holders had been notified multiple times, that they were to refrain from carrying out transaction between their accounts and that of any crypto trading exchange and ignoring the warning could result into termination of the account.
There have been numerous tweets from other individuals who have mentioned that along with Digibank and Kotak Mahindra, UCO and India Bank have also been restricting crypto-related activities. Keeping the current situation in view, it is being exceedingly suggested that crypto transactions via banks be stopped at once and individuals should resort to other means of carrying out their transactions.
In likeness with the rest of the world, India has been no exception about legalizing cryptocurrencies. Last year in April, the Central bank of India, the Reserve Bank of India (RBI) banned the sale and purchase of crypto, deeming it illegal and a punishable crime. RBI had explicitly warned banks to not work with businesses offering cryptocurrency solutions, however, there had been no warning as to cease trading of cryptocurrencies among individuals.
The regulatory situation in India has been no different to that of many other countries in the world. Last year in December, a panel that was specifically tasked with the job to draw up a set of rules and regulation for cryptocurrencies submitted their report to the finance minister. Allegedly, the panel had also suggested the formation of a national cryptocurrency. The finance minister of India had previously mentioned that cryptocurrencies were not to be considered “legal tender” in India. But a nationwide ban could be impossible to implement because even if the big exchanges are banned smaller exchanges are bound to pop up.