Kotak Bank will conduct business with WazirX, one of the country’s top crypto exchanges, after nearly eight months of payment freezes by most high-street banks that continue to avoid crypto investors and bourses. In reaction to the Reserve Bank of India, WazirX closed its account with ICICI Bank, India’s second-largest private lender, roughly a year ago. MobiKwik, a digital wallet and payment services company, took over the majority of WazirX’s operations.
As the sector became aware of the regulator’s dissatisfaction, more and more significant banks, including HDFC Bank, Axis Bank, and SBI, prohibited payments involving crypto platforms and suppliers. Payment gateway companies, operating as third parties, are the link for moving payments from a customer’s bank account to a merchant’s payment portal.
Despite the fact that crypto investments are insignificant in comparison to other financial assets, cryptocurrencies might emerge as a new and rising asset class if the government, which is working on a new law, finally authorizes local trading of certain cryptocurrencies. Kotak, who is banking on it, wants a share of the action. The bank is also warming up to the trade and has made contact with other cryptocurrency exchanges such as Zebpay. The Reserve Bank of India (RBI) prohibited banks from assisting payments for cryptocurrency-related activities in 2018, a regulation that was overturned by the Supreme Court in March 2020.
However, different banks read the RBI statement differently, and most lenders have yet to re-establish their connections with cryptocurrency exchanges. Furthermore, most bank officials and relationship managers dissuade consumers from investing in cryptocurrency – an investment in which the banks get no commission. According to industry insiders, several big banks are unaware that many clients are utilizing their bank accounts to acquire or sell cryptos, despite the institutions’ strictures to payment gateway and processing businesses to limit crypto-linked payments.