In a response received to a Right to Information application filed by a New Delhi based lawyer and founder of blockchainlawyer.in., Varun Sethi on April 9th, India’s Supreme authority for monetary decisions, The Reserve Bank of India (RBI), revealed that it neither did any research nor set up any committee that could look into or study cryptocurrencies or virtual currencies as RBI calls it.
Cryptocurrency a tough nut to crack for RBI
The rumblings from the Reserve Bank of India (RBI) are threatening since 2013 for Bitcoin investors. The banking regulator has issued four warnings against Bitcoin (BTC) and other crypto-currencies since December 2013, the last few explicitly calling it a Ponzi scheme.
Stock market regulator Securities and Exchange Board of India (SEBI) has made a cautionary statement on the digital currency. It all fuelled up when to its height when Arun Jaitley made a surprise declaration in Budget 2018: “Bitcoins will not be considered lawful or legal tender in India.”
On April 6, the RBI through its notice titled ‘Prohibition on dealing in Virtual Currencies’, mandated banks, e-wallets, and payment gateway providers to withdraw support for cryptocurrency exchanges and other businesses dealing with VCs in India.
In India, Bitcoin has presented one of the trickiest regulatory challenges in recent times. Investors and millennials are loving it in spite of regulator warnings. This is making RBI jittery. And government remains wary of its avatar as its accepts blockchain but avoids bitcoins.
Supreme court to have the final say
This is clearly a historic tussle between the principles of free market and the universal expectation of regulatory oversight which now is the court of the Apex Court of the country that is scheduled for hearing on July 20. The case that looked weak for the cryptos to survive in this country has suddenly found feat after these revelations.
Also, The lack of proper stakeholder consultation and the absence of reasonable grounds to restrict any business are the primary provisions under which the RBI notice is challenged in the Supreme court.
A Layer named Rashmi Deshpande from Khaitan & Co represents one of the petitioners in the Supreme Court was quoted
“This RBI response has cemented our case ahead of the hearing in SC. The grounds on which our writ petition has been filed is that the RBI has not done enough research to ban a business completely,”
Experts say petitioners will likely try to use this response to demonstrate in front of the Supreme Court, how RBI’s decision did not lay basis on credible or neutral evidence of harm. This may affect the constitutionality of the RBI’s guidance.
Do you think cryptocurrencies will find support from Supreme Court or Reserve Bank will have the last laugh?