Banks informing customers about crypto pitfalls

Top private banks are reaching out to customers who invest in cryptocurrencies and informing them about the risks associated with the asset class, even as the government is working on legislation to regulate digital currencies.

In the past two-three weeks, HDFC Bank, Axis and ICICI Bank have sent emails highlighting the risks to customers who are investing in crypto assets, at a time when crypto exchanges have gone on an advertising blitzkrieg with claims which, according to critics, are at times puffery and misleading.

Bankers said they are worried that such aggressive advertising by crypto exchanges could lure Indians into investing, without knowing the risks, in an asset class infamous for extreme price fluctuations.

“Our worry is that we can put all sorts of algorithms to trace customers who are putting money in crypto and have conversations with them to be careful, beyond that we can’t do much because it’s depositors’ money,” Axis Bank managing director Amitabh Chaudhry said. “I really worry when you see the ads because they seem to be indicating as if it’s like a deposit. One advertisement I saw said that the returns are four times that of fixed-deposit rates.”

Bankers that ET spoke with indicated that the Reserve Bank of India had also cautioned them against exposing their platforms to crypto trading.

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