In yesterday’s hearing, the panel had discussed how RBI’s cryptocurrency ban is unjust and serves no clear purpose. Per live updates shared by Crypto Kanoon, an Indian crypto platform that provides information on the status of cryptocurrencies in the country, Justice Nariman has alleged that it is not the RBI’s case that exchanges be covered by the PSS act, thus, deeming it immaterial.
Potential Threat to Monetary Policy
Following which the counsel for RBI claimed that although, the RBI is not responsible, there lies a potent threat to the monetary policy as cryptocurrencies can be used for cross-border payments. Further, attention was drawn to the various provisions of the PSS Act 2007. Justice Nariman then mentioned that payments need to be through a legal tender and crypto is a legit alternative.
The counsel referred to the IAMAI petition said that exchanges worldwide have been hacked with publications to support their claim. Furthermore, the counsel referred to the concerns of July FATF 2018 report and discussed the use of cryptos in various illegal activities. In order, to strengthen the claim the example of TOR( The Onion Router ) was given to highlight the potential risks involved in crypto. Also, the Silk Road was used as an example for selling illegal drugs. The counsel also referred to the European Union directive of May 2018 which highlighted anonymity as the biggest problem with crypto assets.
The Solicitor General of India alleged that the government is keeping a close eye on the global crypto scenario, referring to the 3rd Meeting of IMC dated 9th Jan.
Further, it was substantiated with various portions of the IMC report that RBI’s decision is research-based and is valid. Subsequently, the counsel referred to the pros and cons of the crypto ban with an example of China. To which Justice Nariman pointed out that consumer protection is the government’s concern and not RBI’s.
Crypto Community Mocks RBI
The crypto community rubbished RBI’s claims as childish and felt that the research done by RBI was a half-baked effort. Furthermore, using China’s example was also considered vague as it was purely based on the ICO bubble and in the present case China is embracing Bitcoin and even recognized it as “virtual property”.
The end of the hearing today marked an unpredictable turn and Justice Nariman pointed out that RBI cannot base its decision on other studies. Moreover, the government has not advocated a complete ban on cryptos rather suggested that the vices be eliminated. It was further suggested that if it is the case of crypto exchanges being involved in illicit activities, the money laundering act can be applied. Thus, making them directly accountable to banks. All the concerns raised by RBI were addressed and the claims made by RBI fell flat.
Further, the exchanges in question were not dealt with clearly and it was wrongly perceived that they were asking to lift the ban. Rather, there was simply a plea for reconsideration.
Conclusively, Justice Nariman has asked the RBI counsel to furnish documents substantiating their claims and reconsider the banking ban imposed by RBI. Lastly, RBI has been given a time of two weeks to give the exchanges a befitting reply and submit the documents within a week.
The panel is yet to reach a final outcome and the session will be resumed on September 25.