Kotak Mahindra is the first major bank in India to open doors to cryptocurrency trading. It has decided to open an account with the WazirX exchange to receive and pay money to those who trade on the exchange amid growing perceptions that the government has no intention of banning cryptocurrency, but would like to regulate it. Most major banks had stopped paying a few months ago, fearing a blanket ban on digital assets. Also, the Reserve Bank of India (RBI) had repeatedly expressed concerns about the unpredictable impact cryptocurrency would have on the existing financial system powered primarily by fiat currency.
Multiple reports said that Kotak has opened an account with WazirX and the necessary paperwork and test runs have been completed. If all goes well, the partnership would allow investors trading on WazirX to pay through the bank account and receive funds. So far, however, neither side has made an official announcement.
The news comes as the government considers legislation to regulate the future of cryptocurrencies in the country. For eight months, most of the leading banks in the country had frozen cryptocurrency payments.
A report in DailyExpertNews stated that under the proposed legislation to regulate cryptocurrency in India, people and organizations who violate government regulations on crypto financing will face fines of up to Rs 20 crores and jail time of 1.5 years.
In April 2018, the RBI had banned banks from supporting crypto transactions. A year later, the Supreme Court revoked the ban. In May of this year, the RBI quoted the Supreme Court ruling and clarified to banks that they can now engage in the cryptocurrency market. But most of the banks were waiting to see how this new RBI directive was received by the market and also whether the government will ban cryptocurrency trading.