Why banks are playing hard to get with crypto exchanges

moneycontrol.com:

Over the last few weeks, crypto exchanges have been facing multi-faceted challenges as trading volumes continue to drop and UPI and other major payment methods have been frozen across the top crypto exchanges. In the last few days, banks including Kotak Mahindra have  withdrawn support from exchanges in what can be seen as a domino effect after US crypto exchange Coinbase was forced to pause UPI on its platform.

According to industry experts, the very public announcement by Coinbase led to banks becoming more cautious in partnering with crypto exchanges.

 An industry executive, who did not wish to be named, says that the key concerns of banks around cryptos is that they still do not fall under the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act.

 “The concerns around money laundering through crypto can be only addressed with regulations and if exchanges start participating in FATF travel rules etc.,” he added.

 The Financial Action Task Force (FATF) is an inter-governmental policymaking body whose purpose is to establish international standards, and to develop and promote policies both at the national and international levels to combat money laundering and the financing of terrorism.

 FATF’s Travel Rule guidelines require all parties in crypto trades, including exchanges, to share information regarding recipients of cryptocurrencies for transactions over USD/EUR 1000.

 Keeping a distance

The Reserve Bank of India’s (RBI) staunch view that cryptocurrencies must be banned is well known, and many banks too have kept a distance from exchanges in an environment where cryptos continue to be unregulated in the country.

 “The regulators and government don’t want the industry to grow unchecked in a grey