Kotak Mahindra bank has sent out of a circular asking all customers to stop using their accounts for any transactions involving Bitcoin or any other kind of cryptocurrencies. In the recent circular, the bank printed out a list of their immediate transactions to cryptocurrency exchanges.
Cryptocurrency trading in India is going through a tumultuous period since the past few months. The Reserve Bank of India (RBI) had issued a circular asking all banks and financial institutions to stop engaging in cryptocurrencies in April this year. However, the Supreme Court of India put a stay to the order until a final hearing in July 2018. The cryptocurrency community’s focus is now on two important dates (July 5 and July 20) when the future of cryptocurrency in India will be decided. In spite of that Kotak Mahindra has gone full offensive singling out cryptocurrency traders in their bank.
In the circular, the bank warns account holders using their account for cryptocurrency trading. The statement said that the bank will not be responsible or liable for a decline of any transactions, inconvenience, and the return of cheques or losses arising due to account closure. While it is possible that all banks might be forced to shut down crypto accounts after Supreme Court’s verdict, Kotak Mahindra Bank has jumped the gun too fast by threatening to terminate bank accounts of crypto traders.
Bank’s threat unjustified
As per the statement sent out to its account holders, the bank clearly requested and rather warned the customers from using their account for transactions involving any virtual currency.
In this regard, the bank does not encourage its customers using their accounts maintained with us for carrying out transactions involving any kind of crypto/virtual currencies and hence we request you to immediately stop transactions involving dealings in Bitcoin or any kind of crypto/virtual currency from your above-mentioned account.
In this case, it is observed that you have undertaken such transaction post receipt of this letter, you may treat this letter as an advance caution letter and bank will be constrained to close your account without giving any further intimation to you.”
Even though the judgment regarding crypto trading is still pending in the Supreme Court, the Kotak Mahindra Bank came up with its own decision. It is not long ago when rumors of India deciding to legalize cryptocurrency with an 18% Good and Services Tax (GST) was doing the rounds. It is hence unjustified on the part of the bank to send out circulars even before a final decision has been made by the government and the Supreme Court of India.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]