What changed
RBI observed that some banks were still warning customers about virtual currencies by referencing its April 2018 circular. The central bank has now explicitly stated that circular was struck down by the Supreme Court on March 4, 2020, and cannot be cited or quoted anymore.
What it means for you
Banks and regulated entities cannot use the old 2018 circular to restrict or caution customers against virtual currency dealings. However, they must continue to perform due diligence under existing KYC, AML, CFT, and PMLA rules, and ensure FEMA compliance for overseas remittances involving VCs.
What you must do
- Immediately stop citing the April 2018 circular (DBR.No.BP.BC.104/08.13.102/2017-18) in any customer communication regarding virtual currencies.
- Update internal compliance manuals and training materials to reflect that the 2018 circular is no longer enforceable.
- Continue to apply standard KYC, AML, CFT, and PMLA obligations for all transactions, including those involving virtual currencies.
- Ensure FEMA compliance for any overseas remittances related to virtual currency transactions.
Who it affects
All Commercial Banks, Co-operative Banks, Payments Banks, Small Finance Banks, NBFCs, Payment System Providers
Can we still warn customers about virtual currency risks using the 2018 circular?
No. The Supreme Court set aside that circular on March 4, 2020, so it cannot be cited or quoted in any customer communication.
Do we have any obligations for virtual currency transactions now?
Yes. You must apply standard KYC, AML, CFT, and PMLA due diligence, and ensure FEMA compliance for overseas remittances involving virtual currencies.
Does this mean RBI now permits banks to deal in virtual currencies?
The circular does not grant explicit permission; it only removes the 2018 prohibition. Banks must still follow all other applicable regulations and their own risk assessments.