The Reserve Bank of India has not issued any instructions in violation of the Supreme Court’s March 2020 order which quashed a circular issued by the regulator, preventing regulated financial entities from dealing with cryptocurrency related firms, a person in the know said.
The RBI has not done anything or issued any instruction which goes against the Supreme Court order, this person said, speaking on condition of anonymity.
Crypto exchange Coinbase Inc’s CEO Brian Armstrong, in a statement earlier this week, said that “informal pressure” from the banking regulator had led to the unified payments interface option being disabled for users in India last month.
“So, a few days after launching we ended up disabling UPI because of some informal pressure from the Reserve Bank of India, which is kind of the treasury equivalent there,” Armstrong had told investors while announcing the exchange’s quarterly results on Tuesday.
Armstong added that the regulator might be in violation of the Supreme Court’s order in the matter. However, Coinbase was in favour of working with the regulator and relaunch its India operations, he had said.
Two years ago, the apex court had set aside the RBI’s April 2018 strictures, which blocked banks and other regulated entities from providing services to crypto-related firms on grounds of proportionality.
The cryptocurrency industry has been complaining about the lack of adequate support from the financial services industry, which has affected their ability to process user payments. This, coupled with recently introduced taxes has led to a 30-40% drop in volumes on crypto exchanges, BQ Prime had reported.
The RBI has cautioned users about cryptocurrencies due to the risk of illicit activities such as money laundering and terrorist financing. The RBI is also concerned about price volatility and lack of customer protection, the person quoted above said.