Indian Banks Put Crypto Traders’ Accounts Under Scrutiny


HSBC, HDFC and Citi are now requiring India crypto traders to provide information about their activities or they risk losing their funds.

February 24, 2021 | AtoZ Markets – Cryptocurrency traders and investors from India are among the latest victims of a   growing  trend of personal account closings by global banking operations.

India’s parliament is currently contemplating a nationwide cryptocurrency ban that critics of the local industry, such as former Coinbase CTO Balaji Srinivasan, have likened to ” banning the internet for five years .”

Related: ‘We Plan To Regulate, Not Ban Cryptocurrencies” Indian Finance Minister

Indian Banks Sending Notices to Crypto Traders

The Economic Times reports that clients of India’s private banks such as HDFC, HSBC and Citi have been receiving  notices this year asking them to clarify transactions related to cryptocurrencies, often forcing them to turn up. in person at your local bank branch.

If these clarifications are not received, the accounts run the risk of being suspended or repossessed. A letter addressed to an affected customer says:

“To comply with regulatory guidelines, banks are advised to exercise due diligence by closely examining account transactions on an ongoing basis to warn users, holders and traders of virtual currencies, including Bitcoins, about the risks. “

In 2020, the Supreme Court of India reversed an order from the Reserve Bank of India asking banks to stop providing services to cryptocurrency traders.

The Indian Parliament is expected to enact a new bill that will  further restrict the financial activities of traders , and prominent members of the Indian crypto community have spoken out against it. Sathvik Vishwanath, CEO of the India-based exchange Unocoin,  believes  a move in the opposite direction is necessary to foster the growth of the fintech space in his country. “With cryptocurrencies by its side,” he said, “the country can bank the huge unbanked population.”

Banks are also preventively closing customer accounts that are considered associated with funds that enter or leave crypto exchanges in various countries.

Nigeria Central Bank Crackdown on Cryptocurrency

On February 5, the Central Bank of Nigeria (CBN) prohibited financial institutions operating in the country from “facilitating payments for cryptocurrency exchanges”, leading to  the immediate closure of bank accounts  associated with the exchanges and individuals who are behind them.

Read also: Nigeria SEC Suspends Crypto Regulatory Plans Amid Central Bank Ban

In the UK, HSBC recently  stopped  accepting crypto exchange transfers entirely. Lloyds Bank, a British retail and commercial bank, has also been stepping up efforts to disengage from cryptocurrency traders, as podcaster Peter McCormack experienced in a   February 22 tweet. However, this can be a  self-inflicted wound.

A former UK-based Bitcoin investor who wishes to remain anonymous told Cointelegraph that major banks across Europe are increasingly distancing themselves from cryptocurrency traders. He said that new accounts are being rejected by banks on the basis of their crypto-related involvement.

“I was looking to openly approach a new bank and be frank about it,” he says. “But I ran into a brick wall .” The investor claims to have placed “six-figure amounts” through HSBC “without a hitch,” but that legacy accounts are being treated differently than new ones.

“If you don’t tell him and you’re already inside, it seems okay. But if you ask, it’s a ‘no’.”

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