One of India's largest private sector banks, ICICI Bank, has made another stupid move to curb the growth of cryptocurrencies in India. The bank has started warning its customers to not use its remittance services for cryptocurrency purchases.
What this means is that in case a customer wants to convert INR to USD and send that USD to an exchange to buy a coin that is not listed on Indian cryptocurrency exchanges, then the bank has warned its customers from doing that. Even users who want to build a stack of Bitcoin in some other country under the pretense of sending money to their family members overseas have been issued a warning.
The bank has also modified its remittance form with the following declaration for customers -
The above remittance is NOT for investment/purchase of Bitcoin/Cryptocurrencies/Virtual Currencies (such as Ethereum, Ripple, Litecoin, Dash, Peercoin, Dogecoin, Primecoin, Chinacoin, Ven, Bitcoin or any other virtual currency/cryptocurrency/bitcoin).
The warning does not end here. The bank is also warning users to not use any funds generated from cryptocurrency transactions, say profits on one's investment in cryptocurrency, for outward remittances.
Banks are clearly being forced to do this to adhere to the same regulation I had highlighted in one of my earlier posts - FEMA (Foreign Exchange Management Act). This regulation will keep popping up in various moves by Indian banks till India develops a regulatory framework for crypto.
Now what is missing from the warnings is this -
Users should not use any fiats funds to purchase cryptocurrency for overseas transfers and sale to another currency.
I think the above will find its way to ICICI's remittance form soon.
None of these moves will help banks adhere to FEMA. However, in case of any one-off illegal matter that evolves, the person will be held accountable for a false declaration. Banks, as usual, will never be held accountable for anything and even if they are, they will pay a paltry fine and walk away. The customer will, however, end up in prison.
Anyway, such declaration on any form is useless. There are many ways around this and users can easily purchase any cryptocurrency they want to, post any money transfer. Banks are simply trying to save their ass based on RBI's notification asking banks to adhere to existing regulations when it comes to crypto transactions.
Post this news Bitcoin fell below $32k and INR weakened slightly. Of course, this news had nothing to do with both the events. :D