Kotak, India’s largest private bank, has become the first to open its doors to the crypto community. According to data from a report published in the Economic Times.
Kotak enters into partnership with crypto exchange
The banking giant announced that it is partnering with crypto exchange WazirX. This allows traders to use their banking services to liquidate their funds. The partnership between the two parties is seen as a major breakthrough for the crypto community. This is as Indian banks have frozen crypto payments and withdrawals for the past eight months.
“WazirX has opened an account with Kotak that can be used to receive and pay money from investors. The account has yet to become operational. They are now doing paperwork, KYC and some testing.“
Private banks in India have refused to do business with crypto platforms due to a lack of regulatory clarity. In addition, they were often found using invalid Reserve Bank of India (RBI) circulars to deny services.
The RBI circular in question dates back to 2018. At the time, the Indian Central Bank was ordering banks not to offer their services. The circular was later disqualified by the Supreme Court in March 2020, allowing banks to offer their services. However, it had little or no impact on the actual behavior of banks.
Good news for the crypto community
Rameesh Kailasam, CEO of the industry lobby IndiaTech.org, explained why banks are refusing to offer their services. Even after the Supreme Court ruling:
“After RBI clarified to banks in May of this year that they cannot cite the 2018 order as set aside by the Supreme Court, banks were free to participate in the crypto currency ecosystem. Since then, banks have been allowed to participate, provided they will carry out the necessary due diligence processes around KYC, AML, CFT, PMLA, FEMA. In addition, they should look at their own financial health and risk exposures. That is why banks that have done their homework are usually free to get in touch with the sector.”
The latest partnership between Indian crypto exchange WazirX and popular banking giant Kotak is good news for the crypto community. The Indian government will discuss the crypto currency law during the ongoing winter parliamentary session. Industry insiders suggest that the government wants to regulate digital assets as an asset class rather than imposing a blanket ban.