Ahead of its 73rd Independence Day, there was a hearing on cryptocurrencies in the Indian Supreme Court today. While the court has adjourned the case to August 20 with mixed statements on crypto regulations, a significant point that emerged in the hearing was that the banking ban imposed on cryptocurrencies by India’s central bank, RBI, is illegal.
RBI’s Circular Banning Banks To Deal Crypto Was Illegal
On 15th August 2019, India will celebrate its 73rd Independence Day, but unfortunately, the Indian crypto community is still beset with the banking ban on Crypto. According to a thread published by Crypto Kanoon, an Indian platform for crypto regulatory news, today’s hearing highlighted that “RBI’s involvement to restrict banks dealing with crypto during April 2018 was illegal”.
Indian crypto investors, enthusiasts, and traders have been waiting for over a year to hear from the Supreme Court on its stance on cryptocurrencies after RBI’s banking ban. Though the rise of P2P exchanges have paved alternative ways to invest and trade in cryptocurrencies in India, however, the lack of a regulatory framework around cryptocurrencies is not conducive to their development. Despite many discussions between the Supreme Court and industry bodies, the issue remains unresolved.
On August 14, 2019, the case was listed and Mr Ashim Sood, Counsel for IAMAI took charge and explained why crypto needs support from the banks. It is worth noting that the RBI cracked down on banking support towards cryptocurrencies in India in 2018 and since then, investors have been unable to use their bank accounts for accessing the services of crypto platforms. Counsel Mr Ashim points out that the RBI taking actions against consumers’ interest is not within the scope of legality. Following the Counsel’s view, the Judge quickly remarked that RBI’s action against Private businesses in the form of 6th April circular is illegal.
Judgement summarises that RBI cant step out of its powers as set out in Banking regulation Act. Therefore its action against private buisinesses in the form of 6th april circular is illegal.
— Crypto Kanoon (@cryptokanoon) August 14, 2019
RBI Has No Power To Exercise Ban on Crypto
In the hearing, it was explained by the counsel that RBI’s banking ban doesn’t comply with the banking regulation Act which means that the central bank can only rule the inner working of banks and not private businesses. The counsel asserted that the RBI could not step out of its powers set out in the banking regulation Act.
The counsel also pointed to how the RBI has overstepped its role. In India, since there are no specific regulations around cryptocurrencies as yet, and so, they are neither coins nor currencies. Therefore, the RBI Act and Payment Settlements Act do not apply to Cryptos.
Counsel says that RBI in its reply itself admits that RBI does not have jurisdiction to speak on the legality of Crypto as it is neither coins nor currency and RBI Act and Payment Settlements Act are not applicable on Cryptos.
Also, the counsel strongly urged that “the decision to ban or regulate should have come from the legislature instead of RBI”.
The counsel also presented to the court facts about how other G20 nations including Japan, Australia, USA, UK and Saudi Arabia were regulating cryptocurrencies. They (Counsel) referred to UK’s regulatory body Financial Conduct Authority’s (FCA) announcement that classified crypto tokens into three categories; exchange tokens, utility tokens, and security tokens. CryptoKanoon also stated that New York’s approach to crypto regulations were put forth in detail and the Judge found that interesting.
With this, the counsel urged the court to consider regulations for crypto assets in India.
The hearing ended with the Counsel saying that cryptocurrency, like every other technology had “detrimental effects”, but these detrimental effects needed to be regulated like other countries were doing.
So readers, what do you expect from the upcoming hearing on crypto v/s India? Let us know in the comments below