Indian banks put crypto traders’ accounts under the microscope


Cryptocurrency traders and investors in India are among the latest victims of a growing trend of closing personal accounts by global banking.

India’s parliament is currently considering a nationwide crypto ban that critics of the local industry, such as former Coinbase CTO Balaji Srinivasan, have likened to “the five-year internet ban” .

The Economic Times reports that clients of private banks in India such as HDFC, HSBC and Citi have received notifications this year asking them to clarify crypto-related transactions, often requiring them to visit their branch in person. local banking. If this clarification is not received, the accounts may be suspended or foreclosed. A letter addressed to an affected client states:

“To comply with regulatory guidelines, banks are urged to exercise due diligence by closely reviewing transactions made on the account on an ongoing basis to alert users, holders and traders of virtual currencies, including Bitcoin , risks.

In 2020, the Indian Supreme Court overturned an order of the Reserve Bank of India in which banks were asked to halt the provision of services to cryptocurrency traders.

India’s parliament is expected to pass a new bill that will further restrict financial activities of traders, and prominent members of India’s cryptocurrency community have spoken out against it. Sathvik Vishwanath, CEO of India-based exchange Unocoin, believes a move in the opposite direction is needed to encourage the growth of the fintech space in his country. “With crypto by its side,” he said, “the country can bank the massive unbanked population.”

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Banks are also preemptively closing customer accounts considered to be associated with funds entering or exiting cryptocurrency exchanges in a number of countries.

On February 5, the Central Bank of Nigeria banned financial institutions operating in the country from “facilitating payments for cryptocurrency exchanges,” which led to the immediate closure of bank accounts associated with the exchanges and the individuals behind. them.

In the UK, HSBC recently stopped accepting transfers from cryptocurrency exchanges. Lloyds Bank, a UK retail and commercial bank, has also stepped up efforts to disassociate itself from cryptocurrency traders, as podcaster Peter McCormack experienced on February 22. Tweeter. However, this can be a self-inflicted injury.

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A longtime UK-based Bitcoin investor who wishes to remain anonymous told TBEN that Europe’s big banks are increasingly distancing themselves from crypto traders. He said new accounts were denied to banks due to their involvement in crypto.

“I was looking to openly approach a new bank and be frank about it,” he says. “But I encountered a brick wall.” The investor claims to have put in “six-figure amounts” through HSBC “without problem”, but that old accounts are treated differently from new entrants.

“If you don’t tell them and you’re already in it, that sounds good. But if you ask, it’s a “no”. “