Major Indian bank breaks ‘banking ban’ with WazirX crypto exchange deal

Published at: Dec. 6, 2021

Kotak, India’s leading private bank, has reportedly become the first to open its gates to the crypto community, as per a report published in Economic Times. 

The banking giant announced it has partnered with the leading crypto exchange WazirX, which would allow traders to use the banking services to liquidate their funds. The partnership between the two parties is being seen as a major breakthrough for the crypto community given Indian banks have frozen crypto payments and withdrawals for the past eight months.

"WazirX has opened an account with Kotak which can be used to receive and pay money to investors trading on the exchange. The account is yet to become operational. Paperwork, KYC, and some testing are on," said one of the people familiar with the matter.

Private banks in India have refused to do business with crypto platforms citing a lack of clarity on regulations and were often found using non-valid circulars from the Reserve Bank of India (RBI) to deny services. 

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

The RBI circular in question dates back to 2018 when the Indian Central Bank ordered banks to avoid offering their services. The circular was later disqualified by the Supreme Court in March 2020, clearing banks to offer their services, however, it had little to no impact on Banks' actual behavior. 

Related: India to regulate, not ban, crypto: Cabinet documents

Rameesh Kailasam, CEO of the industry lobby IndiaTech.org explained why banks refuse to offer their services even after the supreme court ruling:

"Post RBI clarifying to banks in May this year that they cannot cite the 2018 order as it was set aside by the Supreme Court, banks were free to engage with the cryptocurrency ecosystem. Since then banks have been permitted to engage provided they undertake necessary due diligence processes around KYC, AML, CFT, PMLA, FEMA, besides looking at their own financial health and risk exposures. Hence banks who have done this homework would typically be free to engage with the industry."

The latest partnership between one of the leading Indian crypto exchanges WazirX and popular banking giant Kotak also hints toward positive crypto regulations in the making. The Indian government is set to discuss the cryptocurrency bill during the ongoing winter Parliamentary session. Industry insiders suggest that the government is looking to regulate digital assets as an asset class rather than imposing a blanket ban.

Tags
Related Posts
Mastercard is preparing its infrastructure for the deployment of CBDCs
During an earnings call with investors and stakeholders, Michael Miebach, CEO of Mastercard, discussed his positive outlook on the cryptocurrency industry. The company had seen sizable volume growth in consumers using their Mastercards to purchase crypto and secured several partnerships with cryptocurrency firms. But Miebach's most ambitious viewpoint comes from a discussion regarding central bank digital currencies, or CBDCs, saying: "We are saying at this point in time, the most likely chance for this kind of technology to work for payments is if it's issued through a government in the form of a CBDC. We said that on a couple …
Adoption / Oct. 28, 2021
Banning Bitcoin is like rejecting the US dollar, entrepreneur warns India
An Indian cryptocurrency ban would have grave implications for the future of the country’s economy, and would result in currency devaluation “of the worst form,” says blockchain entrepreneur and HashCash CEO Raj Chowdhury. Chowdhury, also the managing director of the United States-based PayBito cryptocurrency exchange, said India’s rejection of Bitcoin (BTC) and other cryptocurrencies would be the equivalent of rejecting the U.S. dollar. Without regulating and eventually adopting cryptocurrency as a reserve currency, Chowdhury believes India’s economy would suffer in the long term. “Maintaining Cryptocurrency reserves are as important as maintaining dollar reserves. By banning crypto, India will end up …
Technology / March 25, 2021
$2.5T crypto market will not wait for nations to onboard: WazirX CEO
Indian entrepreneur and the CEO of crypto exchange WazirX Nischal Shetty envisions a race between countries to launch their local versions of central bank digital currencies (CBDC) in the coming year. Speaking to Cointelegraph, Shetty said that the year 2022 would be an extension of the ongoing discussions around crypto regulations, exchange-traded funds (ETFs) and the emergence of the metaverse: “We’re optimistic that we’ll get regulatory clarity, see institutional participation fuel retail adoption. We also expect to see more metaverse projects making an entrance.” Shetty pointed out that the crypto industry today — directly or indirectly — employs about 50,000 …
Adoption / Dec. 29, 2021
Crypto Biz: The blockchain revolution will cast aside the skeptics, Dec. 23-30
From a price perspective, the cryptocurrency market is ending 2021 with a whimper as Bitcoin (BTC), Ether (ETH) and other digital assets continue to trade well below their prior peaks. But the business of blockchain and crypto is heating up, as evidenced by the arrival of institutional capital and the flood of venture funding into the space. According to Nischal Shetty, CEO of India's WazirX crypto exchange, the digital asset revolution is already underway and will continue with or without your participation. Below is the concise version of the latest "Crypto Biz" newsletter, which is delivered to your inbox every …
Business / Dec. 30, 2021
India’s crypto tax provides little legal clarity for traders and exchanges
Earlier in February, Indian Finance Minister Nirmala Sitharaman announced a tax proposal that would bring the relatively unregulated digital asset space under the purview of tax authorities. The proposal includes a 30% income tax on crypto returns and a 1% tax deducted at source (TDS) by crypto exchanges on transactions above 10,000 Indian rupees ($133). The announcement came during the parliamentary budget session for 2022, and the government has already set April 1 as a deadline for crypto exchanges to comply with the new tax regulations. The introduction of the crypto tax was widely misreported as a form of legal …
Adoption / Feb. 17, 2022