- Indian banks are freezing bank accounts of users dealing in crypto
- Banks warn people that any account dealing with cryptocurrency related transactions may be blocked
- Indians move to P2P trading to keep crypto alive
Rewind of Crypto Fiasco in India
The media went crazy back in 2018 when the Reserve Bank of India (RBI) gave a 3 month notice period to all banks in India to stop dealing in crypto transactions.
The banks were asked to block the accounts of users found linking their account to any crypto-exchanges or make any deposits or withdrawals. The 19th meeting of the Financial Stability and Development Council (FSDC) led by India’s finance minister Arun Jaitley deliberated on the issues and challenges of digital currencies in the country.
Supposedly an inter-governmental committee was set up to study the various use cases and a legal framework for cryptocurrencies has skipped the matter entirely and suggested the ban of Cryptocurrencies in India.
The Indian Government’s press release on the matter stated:
“The council also deliberated on the issue and challenges of Crypto Assets/Currency and was briefed about the deliberations in the high-level committee chaired by secretary (Economic Affairs) to devise an appropriate legal framework to ban use of private crypto currencies in India and encouraging the use of Distributed Ledger Technology, as announced in the Budget 2018-19.”
The above note was highly misunderstood because the press release stated a legal framework was to be enforced to ban the “use” of cryptocurrencies which could extend to trading, and its application as a payment method but not necessarily owning cryptocurrencies. Yes, it’s not “illegal” to possess cryptocurrencies in India, as a lot of users still continue trading on foreign exchanges like Binance.
Banks in India have reportedly been closing accounts they believe have made transactions involving cryptocurrencies. A majority of Indian users and trust me that’s a lot, have been affected by this abrupt decision. Two major banks in the country, namely Kotak Mahindra Bank and DigiBank have recently gained more attention since they’ve sent their users letters as revealed to us by Twitter user Indiancryptogirl who posted them:
"We noticed you did a transaction involving crypto, hence, we will close your account within 30 days"
– Kotak Mahindra Bank
P.S: Glad they're doing it for me pic.twitter.com/JIWzeU54i5
— Indian CryptoGirl (@DesiCryptoHodlr) January 12, 2019
Bypass the Account Freeze
Ever since the aforementioned Tweet came into light, crypto traders and hodlers in India have had a tough time sleeping. However, things can still be redeemed for the local crypto ecosystem.
There’s a very easy trick to bypass the account freeze forced by Indian banks.
In order to do this, just make sure that while trading a cryptocurrency (example, Bitcoin), the other party or you don’t put anything related to crypto in the transaction remarks section. This way, banks will have no frame of reference and be unable to detect any suspicious transaction from your account.
Hence, the next time you sell BTC, just make sure the buying party doesn’t mention anything crypto-related in the remarks section of the transaction.