According to an Economic Times report, Kotak, India’s largest private bank, is believed to have been the first to open its doors to the crypto community.
The bank giant announced that it had partnered with WazirX, a leading cryptocurrency exchange. This partnership would allow traders to access the banking services to liquidate funds. This partnership is a significant breakthrough for crypto communities, as Indian banks have been unable to pay or withdraw crypto funds for eight months.
“WazirX opened an account at Kotak that can be used to send and receive money to investors who trade on the exchange. The account has yet to be operational. One person familiar with the matter said that paperwork, KYC and some testing are ongoing.
Private banks in India have refused business with crypto platforms, citing a lack of clarity about regulations. They were frequently found using invalid circulars from Reserve Bank of India (RBI), to deny services.
Cointelegraph reached out to WazirX, Kotak but they did not respond immediately.
The RBI circular at issue dates back to 2018, when the Indian Central Bank instructed banks not to offer their services. In March 2020, the Supreme Court disqualified the circular, allowing banks to offer their services. However, this had minimal or no effect on Banks’ actual behavior.
Related: India will regulate crypto, not ban it: Cabinet documents
Ramesh Kailasam is the CEO of IndiaTech.org, an industry lobby. He explained why banks refused to offer their services despite the Supreme Court ruling.
“Banks were allowed to interact with the cryptocurrency ecosystem after the RBI clarified to them in May that they could not cite the 2018 order, as it was overturned by the Supreme Court. Banks have been allowed to engage with the cryptocurrency ecosystem since then, provided that they complete necessary due diligence processes, including KYC, AML and CFT, PMLA and FEMA. They also need to assess their financial health, risk exposures, and take into account their financial health. Banks that have done their homework will typically be allowed to interact with the industry.
Positive crypto regulations are possible thanks to the latest partnership between WazirX, one of India’s most prominent crypto exchanges, and Kotak, a popular Indian banking giant. The Indian government will discuss the cryptocurrency bill in the current winter Parliamentary session. According to industry insiders, the government may be looking at digital assets as an asset type rather than imposing a blanket ban.