The Reserve Bank of India  (RBI) has given a huge relief to crypto investors and traders by clarifying that banks and other entities cannot use its 2018 order on virtual currencies to caution their customers. This gives investors more clarity on trading in Bitcoin, Dogecoin and other popular cryptocurrencies.

Internet and Mobile Association of India had contested the circular and the Supreme Court had ruled in favour of the virtual currency industry and asked the government to frame laws. With reports suggesting the government may come up with legislation that will ban such trading in virtual currencies, and the sharp volatility in prices of these crypto-assets, some banks have turned risk-averse and informed customers that they would not be able to execute such trades through their bank accounts.

 The RBI's circular today makes the central bank stance clear that there is no regulatory bar on such trades, but also suggests that banks can take their own calls on these issues. The wording of the circular today puts the onus of due diligence on the banks and said that they have the right to conduct customer due diligence to ensure compliance to know-your-customer, anti-money laundering, combat of financing of terrorism norms along with compliance with Foreign Exchange Management Act for overseas remittances.

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