Major Indian Banks Freeze User Accounts over Crypto-Related Activity

The woes for crypto traders in India gets worse with every passing day. It has been almost a year since the Indian government cracked down upon the crypto business in India, leaving all traders and enthusiasts stranded without any way to add or withdraw cryptocurrency into fiat currency.

The unavailability of banks meant that buying and selling cryptocurrency in the country was, to a great extent, not possible. The traders who already owned cryptocurrency could not cash it out for fiat due to the roadblock set by the Reserve Bank of India.

The ban on banks by the RBI led to traders using other peer-to-peer methods to use cryptocurrency within the country. However, with new information, the country might also curb peer-to-peer crypto transactions.

A few of the major banks have identified some peer-to-peer transactions made between the crypto brokers and the traders. This has led to the banks freezing user accounts that have participated in such transactions with a crypto broker or trader.

Which Are the Banks That Have Frozen User Accounts?

Some of the most popular banks in India have started to freeze user accounts due to crypto related activities. Kotak Mahindra bank which is the second largest bank in India has frozen user accounts due to dealing with other crypto brokers and traders.

Recently, India’s very first, fully digital bank DigiBank by DBS also cracked down on several accounts due to alleged crypto related transactions. This was reported by one of the most prominent traders in the country on her twitter page. An email was sent to the account user which informed the user about the complete block on all credit transactions from that particular account.

ICICI bank has also had a say in this matter and has frozen several user accounts as well. This wave of account freezing by the Indian banks is only going to get worse from here on as more banks follow this trend. Only the government of India and the RBI can end this madness by clarifying with the banks regarding the crypto situation in the country.

Has India Made Cryptocurrencies Illegal?

The bank ban that was forced by the RBI does not mean that cryptocurrency is illegal in India. In fact, in the financial report released by RBI last month, it has been clarified that the use of cryptocurrencies is not dangerous or illegal. However, the country is yet to identify this virtual asset as a legal tender of currency.

The order to stop users from funding their crypto accounts using banks was passed back in April 2018. Ever since all crypto enthusiasts in the country have expressed their belief in the government controlling their financial freedom.
Even though the RBI did release a report stating that the use of cryptocurrency in the nation is not illegal, the ban that has been put on the banks has not been lifted yet.

Conclusion

The cryptocurrency situation in India has been a rollercoaster ride for everyone. The country has not announced cryptocurrencies to be illegal nor has it legalized the same. This uncertainty in the decision of the government has led to many confusions in the country.

As the RBI has not outrightly stated that cryptocurrencies are illegal, all crypto enthusiasts can be sure that once the government has accessed these digital assets, it will allow crypto transactions to take place in the future.

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