IPL advertisements and the dogecoin frenzy has overwhelmed Indian banks to the fullest extent!
According to multiple industry sources, Indian banking institutions went on to enforce ‘informal restrictions on cryptocurrency trading after concerns about alleged money laundering at crypto exchanges, the sudden Dogecoin frenzy and the aggressive marketing push via ads during the Indian Premier League aka IPL.
Since the beginning of this month, several leading banks, especially private-sector lenders such as the ICICI Bank and the Induslnd Bank, have asked their payment gateway partners to stop processing crypto-related transactions.
Other notable banks who have declined from accepting such transactions even earlier include HDFC Bank, Yes Bank, State Bank of India and the Kotak Mahindra Bank. On Saturday, several crypto platforms lost their ability to accept rupee deposits through banking channels such as UPI, NEFT, IMPS, and the RTGS.
Industry Insiders from the banking industry have pointed out that these restrictions could be due to the RBI informally instructing the banks to tighten their compliance with the existing money laundering laws.
All the banks and gateways that have banned cryptocurrency-related transactions haven’t issued any written instructions stating the reason behind the restrictions, which has triggered a lot of confusion in the country’s nascent cryptocurrency space.
Currently, crypto platforms are in the processing of sending a communication to all major banks about the February 2020 ruling of the Supreme Court, which explicitly stated that the banking ban on cryptocurrencies needed to be revoked.
Founders of several crypto exchanges said that major lenders are in violation of the apex court’s order by removing payment support for crypto platforms. Currently, most cryptocurrency exchanges are relying on smaller banks are private wallets to maintain business continuity.
Now, as mentioned earlier, sources claim that the onset of crypto fever has spooked banks by several different factors. One among them is the aggressive marketing push by crypto exchanges during IPL on TV.
But, crypto exchanges, being aware of the tightening scrutiny by banking partners, claim that they have been highly transparent in their disclosures and customers onboardings.
Sharan Nair, Chief Business Officer at Coinswitch Kuber, which advertised aggressively during the IPL season, said that besides strict internal checks, external parties who are responsible for broadcasting took legal permissions before the ads aired during the cricket series.
Industry sources have also mentioned that the sudden dogecoin frenzy is also to blame when it comes to banks imposing informal bans on crypto platforms.
Dogecoin is a meme token available in unlimited supply and has been endorsed by Tesla founder Elon Musk, well known for his notorious tweets, which can sway the market.
Industry insiders believe dogecoin is being viewed as a ‘get-rich-quick scheme by several Indian traders via intraday trading. Dogecoin trading volumes in India has 3x since April, and crypto trading platforms have witnessed record-breaking transaction volumes.
All in all, it is well understood that banks are not very keen to get involved in any grey areas such as crypto investment. It now remains to be seen if and when the Reserve Bank of India will step in and provide some much-needed clarity to all parties involved. We will keep you updated on all future developments. Until then, stay tuned.