India’s central bank, the Reserve Bank of India (RBI), has finally cleared up the air surrounding the legality of cryptocurrencies, saying in a response to a Right to Information (RTI) Act on May 22 that “As on date, no such prohibition exists.”

In April 2018, the RBI had asked banks to discontinue services for cryptocurrency exchanges and other entities. While it was not an outright ban on cryptocurrencies, effectively it was a ban, as Indians had few options to enter the market. Those who had already invested were also in a gray area, unsure of the status of their investments.

The RTI was filed on April 25 by Unocoin co-founder BV Harish, asking if banks were still prohibited from serving traders and exchanges. While most returned to offering services, some banks still refused to serve entities related to the cryptocurrency market. The RTI asked for clarification on the matter. 

In March 2020, the Supreme Court of India struck down the RBI order for banks, saying that it was unconstitutional. This was seen as a landmark victory for the country, and exchange volume and activity have shot up since. Knowing the lucrative potential of the Indian market, Binance and Coinbase have both jumped in. Coinbase has backed topped Indian exchange CoinDCX in a $2.5 million funding round, while Binance has backed Bombay-based exchange WazirX.

Analysts and insiders have said that this new clarification from the RBI is expected to boost confidence and growth in the Indian market, which estimates that the number of Indian cryptocurrency investors could potentially hit dozens of millions of figures. Sentiment has at its highest in recent years, as the government itself works on blockchain solutions for various use cases.