Despite growing membership numbers in the last few months, the cryptocurrency community faces a new hurdle. Citing ‘global apprehensions’ and multiple RBI cautions, HDFC Bank has emailed account holders that they “have decided to not permit usage of HDFC Bank Credit, Debit and Prepaid Cards” to purchase cryptocurrencies.
Hemanth Kumar, CIO of cryptocurrency exchange Unocoin, finds the move surprising – especially as the government has indicated that it will be releasing regulations soon. “This kind of knee jerk reaction and its timing is actually surprising when the Government officials [have] indicated that the regulations on cryptos are to be here soon,” he stated.
Mohit Mamoria, founder of cryptocurrency fund Authorito, agrees that people are vulnerable to scams if they trade in the virtual currencies. However, he also states “none of these scams happened on the regular crypto exchanges for which these transactions are getting blocked by the banks.”
A Violation of Citizen’s Rights?
According to Arko Ganguli, co-founder of cryptocurrency consultancy firm CoinShala, the move from HDFC is “a clear case of violation of rights of the customers [the account holders]”. He continued, “They are restricting activity without any proper regulations. Without any proper regulatory backing, they are not allowing people to use their own money.”
In essence, Ganguli is loosely alluding to Article 21 of the Indian Constitution which gives every citizen the ‘Right to Personal Liberty’.
However, as Kumar puts it, “neither RBI nor the Government has categorically declared cryptos as illegal – which makes this decision of the banks rather disappointing.”
What Does the Future Hold?
According to Mamoria, HDFC is not the first bank in India to release such a statement. Kotak issued him a similar notice in the recent past. Additionally, in America, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. also banned Bitcoin purchases in February.
So, does this mean that this is the end of the party for virtual currencies? Not according to Kumar who believes that this is the best marketing ploy Bitcoin could have hoped for. As he said, “probably, for me, this is the best situation to plug cryptos! You can’t have your funds frozen since there are no entities like RBI or Government in the picture.”
“Again, it’s a feature not a bug.” One that countless crypto traders with HDFC accounts undoubtedly wished they had access to right now!
TheBigScope reached out to HDFC Bank for a comment on this story, but received no reply. We will update this article if and when we do receive a comment.