Major Indian banks break the “banking ban” through the WazirX cryptocurrency transaction agreement

According to reports, India’s leading private bank Kotak has become the first bank to open its doors to the cryptocurrency community. Economic Times.

The banking giant announced that it has partnered with leading cryptocurrency exchange WazirX, which will allow traders to use banking services to clear their funds. Given that the Bank of India has frozen crypto payments and withdrawals in the past eight months, the partnership between the two parties is seen as a major breakthrough for the crypto community.

“WazirX has opened an account in Kotak that can be used to collect and make payments to investors trading on the exchange. The account is not yet operational. Paperwork, KYC and some tests are ongoing,” said a person familiar with the matter.

Private banks in India refuse to do business with crypto platforms on the grounds of unclear supervision, and are often found to use invalid notices issued by the Reserve Bank of India (RBI) to refuse to provide services.

WazirX and Kotak did not immediately respond to Cointelegraph’s request for comment.

The problematic RBI notice dates back to 2018, when the Central Bank of India Order banks to avoid providing servicesThe notice was subsequently disqualified by the Supreme Court in March 2020, Services provided by clearing banksHowever, it has little effect on the actual behavior of the bank.

related: India regulates rather than prohibits encryption: Cabinet documents

Rameesh Kailasam, CEO of the industry lobby group, explained why the bank refused to provide services even after the Supreme Court’s ruling:

“After the Reserve Bank of India clarified to the banks in May this year, they could not cite the 2018 order because it was shelved by the Supreme Court and the bank was free to participate in the cryptocurrency ecosystem. Since then, banks have been allowed to participate, provided In addition to checking their financial status and risk exposure, they also carry out necessary due diligence procedures around KYC, AML, CFT, PMLA, and FEMA. Therefore, banks that have completed this work are usually free to participate in the industry.”

The latest partnership between WazirX, one of India’s leading cryptocurrency exchanges, and the popular banking giant Kotak also hints at the development of aggressive cryptocurrency regulations.The Indian government is Ready to discuss the cryptocurrency bill During the ongoing winter council meeting. Industry insiders said that the government is seeking to regulate digital assets as an asset class, rather than imposing a comprehensive ban.