State Bank of Sikkim is not regulated by the Reserve Bank of India and doesn't adhere to the April 6 mandate which has put a deadline of 5th July on all banking services rendered by regulated banks to cryptocurrency exchanges.
Therefore it seems to given a ray of hope to some traders who believe that this bank can be used for deposits/withdrawals to cryptocurrency exchanges. I've had a few people reach out to me in the past week asking about the prospects of using this bank to move forward.
But it's not so easy as it would seem.
Bank of Sikkim is located far from most economic zones and to use it for trading. Both exchanges and traders would need to have an account with the bank.
Secondly, the bank's ability to provide transactions in real time to traders and exchanges is unknown. It will need IMPS capabilities 24/7 to function and provide high volume transactions to all parties involved. There's no data to support that an activity can be efficiently handled by the bank as yet.
RBI in-fact raised grave concerns on the operations of this bank in the past.
"RBI has pointed out that since the bank does not come under any jurisdiction, financial and operational issues have arisen," the official said, adding that the banking regulator is concerned about protecting the interest of depositors.
State Bank of Sikkim was created according to the State Bank of Sikkim Proclamation, 1968. It is not licensed under Section 22(1) of the Banking Regulation Act, 1949 and therefore does not come under the jurisdiction of the RBI.
However, to open a bank account one needs local address proofs. So unless, customers of any kind can establish residency in the state of Sikkim, it would be very difficult to open an account and use it for cryptocurrency trading.
Hence, it's very difficult to circumvent the RBI decision and for most traders and exchanges State bank of Sikkim is not a valid option they can consider.
Where does that leave us?
P2P trading is our only option then. It's time we looked into it more closely. I'll write more about it closer to the deadline.
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