Kotak, India’s leading private bank, was the first to open its doors to the crypto community, according to a report by The Economist Times.
The banking giant announced that it has partnered with leading cryptocurrency exchange WazirX, which will allow traders to use banking services to liquidate their funds. The partnership between the two parties is seen as a major breakthrough for the crypto community, given that Indian banks have frozen cryptocurrency payments and withdrawals over the past eight months.
A person familiar with the matter said: “WazirX has opened an account with Kotak that can be used to accept and pay for investors who trade on the exchange. The account is not working yet. Paperwork, KYC and some tests in progress. ” a business. …
Private banks in India are reluctant to deal with cryptocurrencies, citing lack of clarity in regulations and often discover that invalid Reserve Bank of India (RBI) circulars are being used for denial of service.
WazirX and Kotak did not immediately respond to Cointelegraph’s request for comment.
The current RBI circular dates back to 2018, when the Central Bank of India ordered banks to avoid providing their services. Subsequently, in March 2020, this circular was rejected by the Supreme Court, allowing banks to provide their services. However, this practically did not affect the real behavior of banks.
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Ramesh Kailasam, CEO of Industry Lobby IndiaTech.org, explained why banks refused to offer their services even after the Supreme Court ruling:
“After the Reserve Bank of India (RBI) made it clear to banks in May this year that they could not cite the 2018 order as it was overturned by the Supreme Court, banks were given the right to participate in the cryptocurrency ecosystem. Banks have since been allowed to participate, provided they follow the necessary due diligence procedures for KYC, AML, CFT, PMLA and FEMA, and take into account their financial health and risk exposure. Hence, the banks that have done this homework are usually free to interact with the industry. ”
A recent partnership between one of India’s leading cryptocurrency exchanges, WazirX, and the popular banking giant Kotak, also points to positive cryptocurrency regulation. The Indian government will discuss the cryptocurrency bill during a parliamentary session this winter. Industry insiders point out that the government is seeking to regulate digital assets as an asset class rather than enacting a general ban.