Relief to Bitcoin, Dogecoin investors: RBI ask Banks to exercise Customer Due Diligence for Transactions in Virtual Currencies [Read Circular]

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Bitcoin - Dogecoin investors - RBI - Virtual Currencies - Taxscan

In a major relief to Bitcoin and Dogecoin investors, the Reserve Bank of India (RBI) on Monday asked the Banks to exercise Customer Due Diligence for transactions in Virtual Currencies.

The RBI clarified that banks and other entities cannot cite its 2018 order on virtual currencies as it has been set aside by the Supreme Court of India in 2020.

“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular DBR.No.BP.BC.104/08.13.102/2017-18 dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020, in the matter of Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from,” Shrimohan Yadav, Chief General Manager of RBI in the circular said.

“Banks, as well as other entities addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances,” the RBI while directing all the Commercial and Co-operative Banks, Payments Banks, Small Finance Banks, Non-Banking Financial Company (NBFCs) and Payment System Providers, said.

The clarification came after leading banks in the past few days cautioned their customers through emails against dealing in virtual currencies such as bitcoin citing the circular

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