Bitcoin rally lures financial institutions to warm up to crypto industry in India: Report

As Bitcoin’s shine outweighs stocks, precious metals and the dollar, Indian banks are warming up to industry and are looking at it as an opportunity. Banks are exploring lending to crypto exchanges and accepting bitcoins as collateral.

In March this year, the Supreme Court lifted a two-year-old ban by the Reserve Bank of India on trading in cryptocurrencies. It allowed banks and financial institutions to provide services related to cryptocurrencies.

Despite the SC revocation, banks did not take to the space as there was no directive from RBI.  However, the RBI in response to a recent RTI said that there is no prohibition on banks undertaking crypto-related activities, opening up the space for banks to offer services, Nischal Shetty, founder and chief executive officer of crypto exchange WazirX told Business Standard in an interview.

In order to capitalise on an industry that has thrived even in the pandemic many more Indian banks are reaching out to exchanges, like WazirX, for working capital, loans and other finance-related needs, the report cited.

The company has, since March, seen a 916 per cent increase in monthly trading volume and 280 per cent increase in user signups, the report cited. It has over 800,000 registered traders.

CREBACO (credit rating for exchanges, blockchain and coin offerings) Global estimates, based on traffic from Indian IP addresses, that the crypto market size in India expanded by 40 per cent in the past two years.

In collaboration with law firm Khaitan and Co., CREBACO has been working on proposals to modify the existing regulations such as FEMA and SEBI to regulate the flow of money and raise capital. It is also working on amendments in Income Tax and GST laws to recognise offences.

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