HDFC Bank and SBI Cards sent emails to their clients last week warning them of the risks involved in trading cryptocurrencies. While HDFC Bank has asked customers to disclose the nature of their transactions with crypto-exchanges, SBI Cards has warned its customers that they should not use their credit cards to deposit funds for crypto-trading purposes.

While HDFC Bank sent emails to specific customers, citing their account numbers, SBI Cards issued a general advisory to its customers. MediaNama saw a copy of both emails.

In recent months, private banks have canceled deposit and payment services for cryptocurrency exchanges in the country. While speculation is rife about the reasons for the move, bankers and industry leaders have said the Reserve Bank of India (RBI) has informally stated that it is comfortable with the level of crypto-trading activity in the country. In January of this year, the government informed Parliament that it would introduce a new bill that would ban cryptocurrency trading, mining, and investment in the country while giving the RBI the necessary powers to start working on a digital currency.

However, since the announcement, the government appears to have watered down its previous position. The finance minister said the proposed legislation would take a “ calibrated approach ” and investors would be granted a moratorium period to reduce their crypto holdings. In addition, the government has made changes to the disclosure rules for companies classifying cryptocurrency holdings as digital assets.

The disclosures apply to promoters, companies and entities that play a fiduciary role, that is, they purchase cryptocurrencies on behalf of end customers. He also clarified that crypto-transactions would be taxable under the Income Tax Act and the Goods and Services Tax regime. Even Nandan Nilekani has publicly stated that he supports the regulation of cryptocurrencies as financial assets. It was recently reported that the government is also considering setting up a new committee to review the effectiveness of cryptocurrency regulation in the country.

SBI Cards issues warning

In its email to clients, SBI Cards said the RBI has repeatedly warned clients of the risks involved in trading and trading virtual currencies. He said the RBI has not granted any license or authorization to entities regulated by them to operate in cryptocurrency systems or any form of virtual currencies like Bitcoins. The email also stated that it would block credit card services to all customers who use their card on a cryptocurrency exchange or trading platform.

Publicity. Scroll down to continue reading.

HDFC Bank quotes RBI’s 2018 circular

In its email to customers, HDFC Bank said customers should visit their nearest branch within 30 days to clarify the nature of certain transactions with crypto exchanges. “We observed that your account likely reflects virtual currency transactions that are not permitted under RBI guidelines,” he said. If the client does not clarify the nature of their transactions with crypto exchanges within the next 30 days, HDFC Bank says they will limit account transactions without further notice.

Interestingly, the bank cited the RBI from April 2018 circular which prevented banks from dealing with any person or company dealing with virtual currencies. But this circular was quashed last year by the Supreme Court on the grounds of proportionality.

Crypto regulations are inevitable: HDFC Bank

In a May 27 report from the treasury department of HDFC Bank, the bank said there were 10 million cryptocurrency holders in India with $ 1.36 billion. “The rampant selling of cryptocurrencies has recently reminded market participants of its still uncertain status in the face of wider acceptability and regulatory concerns. A substantial drop in cryptocurrencies over the past week has raised concerns about their potential as traditional investments, ”the report says. The bank analyzed the returns of major cryptocurrencies and compared them to returns from investments in the S&P and NASDAQ index and gold. While Bitcoin’s returns stood at 36%, since the start of 2021, the returns of the S&P index stood at 17%, the bank said.

“Like most conventional investors, we still have to reconcile the often conflicting properties of cryptocurrencies. Yes, they help protect against sudden swings in other asset classes, but its own volatility which appears to be primarily due to transient episodes of intense interest (e.g. the number of Google searches or a tweet from a major investor) is a bit of a shock absorber. However, with the entry of central banks into the Crypto game, essential properties such as the limited supply of Legacy Cryptos, this is a space that needs to be watched closely. We believe it is only a matter of time before Indian investors have legal access to Crypto games ” HDFC Bank


MediaNama has prepared a guide to cryptocurrency regulation in India, listing the government’s position over the past few years and various policy recommendations; read it here: A Comprehensive Overview of Cryptocurrency Regulation in India.

Read also

Publicity. Scroll down to continue reading.





Source link

About The Author

Mark Lewis

Related Posts

Leave a Reply

Your email address will not be published.