The
2020 ruling set aside a 2018 RBI circular that prevented banks from letting customers use their accounts to send or receive funds for trading in cryptocurrencies.
“Tough questions, and good questions, for NPCI and RBI in India. Is their “shadow ban” a violation of the Supreme Court ruling?” Armstrong tweeted on Tuesday.
Tough questions, and good questions, for NPCI and RBI in India. Is their “shadow ban” a violation of the supreme co… https://t.co/t8m7g53PFV
— Brian Armstrong – barmstrong.eth (@brian_armstrong) 1650923891000
Armstrong was
referring to a news break by ET, according to which leading banks have questioned the shadow ban on crypto and asked NPCI to spell out in a formal directive the curbs on the use of the popular Unified Payments Interface (UPI) in buying and selling virtual digital assets (VDAs), such as crypto.
This comes after several banks disabled UPI options for crypto-related payments following “verbal instructions” from NPCI.
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The RBI and NPCI were not immediately available for comment on whether their actions violated the Supreme Court ruling. Coinbase declined to elaborate on Armstrong’s tweet.
Nasdaq-listed Coinbase
launched its exchange services in India in April but had to shut payments via UPI three days later owing to the informal curbs,
ET reported on April 10. On April 12, crypto trading platform CoinSwitch Kuber also
disabled rupee deposits using UPI.
History of informal curbs
Last year, several banks including ICICI Bank and Paytm’s Payments Bank cut ties with crypto exchanges based on “informal requests” by the RBI to banks. Banks cited the RBI’s lack of acknowledgement of the Supreme Court as a reason for cutting ties with exchanges.
Several leading banks at the time clamped down on customers using bank accounts for cryptocurrency transactions. HDFC Bank and State Bank of India sent notices to many customers on the curbs, warning that their accounts could be permanently shut down.
Since multiple banks were citing RBI’s 2018 circular, which had been set aside by the Supreme Court, the central bank
was forced to clarify in a notice in May 2021 that banks could not use that circular to impose curbs on crypto investors.