Exploring Partnerships: How Banks Can Engage with Post RBI Statement

In recent years, the RBI's stance on cryptocurrencies in India has sparked a myriad of challenges for crypto exchanges. Despite the regulatory challenges, , along with other exchanges such as Unocoin and WazirX, continues to look for opportunities to comply and thrive in the market. Among these exchanges, one unique opportunity has surfaced from the RBI’s statement regarding the State Bank of Sikkim (SBS).

Understanding the Special Status of State Bank of Sikkim (SBS)

State Bank of Sikkim (SBS), formed in 1968, operates in a unique legal context as it is not under the purview of the Reserve Bank of India (RBI). The state bank of Sikkim enjoys a special status under Article 371F of the Indian Constitution. This means that while all other financial institutions in India are required to follow the Banking Regulation Act of 1949, SBS operates under a different set of rules and regulations.

A Unique Property of SBS: A Logistics in Financial Institutions

Unlike most banks in India, the SBS has a unique property that allows its branches in Gangtok to remain open even when other banks' branches close. This is a significant loophole: while SBS operations are not directly regulated by the RBI, they are still considered a financial institution within the country. As such, this makes it a potential partner for crypto exchanges like and others.

Current Market Movements

Unocoin and WazirX have already begun exploring the feasibility of partnering with the State Bank of Sikkim, recognizing the potential that this unique status offers. Major Indian cryptocurrency exchanges, including , are now looking to SBS as a possible avenue for compliance with banking regulations. According to various media outlets, such as Coinnounce and Bitcoin News, these exchanges hope to leverage SBS's special status to create a more regulated environment for crypto transactions.

State Bank of Sikkim and the Banking Regulation Act 1949

It is important to understand that while the State Bank of Sikkim does not fall under the direct purview of the Banking Regulation Act 1949, this does not mean it is without oversight. The act provides framework for banking operations, but SBS's unique status allows it to work in a slightly different manner. For instance, SBS is not authorized under Section 221 of the act, which specifically outlines requirements for banking institutions. However, SBS's operations in financial services can still align with broader regulatory guidelines, making it a valuable partner for crypto exchanges.

Conclusion

The State Bank of Sikkim, despite its unique standing, presents a potential opportunity for crypto exchanges to navigate the complex landscape of Indian financial regulations. As banks like and others seek ways to legally partner with traditional banking systems, the special status of SBS could open new doors. This is an exciting development for the future of crypto banking in India, providing a logistical loophole that could foster collaboration and innovation.