Kotak Mahindra Bank to tie up with Crypto Business, opens WazirX account

Kotak Mahindra Bank has become the first major bank to join the crypto business. Nearly eight months after major banks barred transactions with crypto investors and exchanges, WazirX, one of the country’s largest crypto exchanges, has opened an account with Kotak Bank. This account can be used to receive and make payments to investors trading on the exchange. WazirX had closed its account with ICICI Bank about a year ago. The reason for this was the advice from the Reserve Bank of India (RBI) to banks to stay away from crypto business.

As per ET report, WazirX’s account with Kotak Mahindra Bank is not operational yet. Paperwork and KYC is being done for this. The majority of WazirX’s business is held by MobiKwik, a digital wallet and payment services firm. Many big banks had banned transactions involving crypto exchanges and vendors after fears about RBI’s crypto business.

ICICI Bank had asked payment gateway operators a few months ago to deactivate ICICI’s netbanking service for merchants engaged in buying or selling crypto. Payment gateway firms act as third parties and are a means of transferring funds from a customer’s bank account to the merchant’s portal. The country’s largest bank State Bank of India (SBI) also asked payment processors to shut down SBI UPI for crypto merchants.

Crypto investors are few as compared to other financial assets, but if the central government allows trading of select cryptocurrencies, then this business can grow rapidly. The government is working on a new law for cryptocurrencies. The government has planned to regulate this business.

RBI had banned banks from providing payment facility for transactions related to cryptocurrencies three years ago. This direction was rejected by the Supreme Court last year. However, most banks did not start business with crypto exchanges. Banks also do not advise their customers to invest in crypto and one of the main reasons for this is that banks do not get any commission from it.

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