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RBI Clarifies: 2018 VC Circular No Longer Valid

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2021-22/45 · issued 31 May 2021 · ~2 min read
Quick answerRBI has clarified that its 2018 circular restricting banks from dealing with virtual currencies is no longer valid after the Supreme Court set it aside in March 2020. Banks must stop citing that circular but still apply standard KYC/AML/CFT and FEMA norms for VC transactions.

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.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All Commercial Banks, Co-operative Banks, Payments Banks, Small Finance Banks, NBFCs, Payment System Providers

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

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.

📜 Read the original circular — full text as issued by RBI
RBI/2021-22/45 DOR. AML.REC 18 /14.01.001/2021-22 May 31, 2021 All Commercial and Co-operative Banks / Payments Banks/ Small Finance Banks / NBFCs / Payment System Providers Madam / Dear Sir, Customer Due Diligence for transactions in Virtual Currencies (VC) It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular DBR.No.BP.BC.104/08.13.102/2017-18 dated April 06, 2018 . Such references to the above circular by banks/ regulated entities are not in order as this  circular was set aside by the Hon’ble Supreme Court on March 04, 2020 in the matter of Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from. 2. Banks, as well as other entities addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances. Yours faithfully, (Shrimohan Yadav) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/45 · issued 31 May 2021. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12103&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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