In a rather expected turn of events the Supreme Court of India has declined temporary injunction against RBI’s circular which mandates a ban on banking services to cryptocurrency exchanges in India. This was expected as it was highly unlikely that Supreme Court would intervene in national policy related matters without further hearings on the petitions filed.
On 6th of April, RBI released a circular which allows banks providing services to cryptocurrency exchanges in India until the 5th of July to stop providing banking services. This has put hundreds of thousands of investors from India in jeopardy leading to panic sells in the past month.
Supreme Court however has fixed the next date for hearing on the 17th of May. Crypto Kanoon group is taking the fight against RBI’s decision to the highest court in India. Meanwhile, RBI has come out with a detailed response to the petitions filed against it in the court.
As reported by CryptoKanoon in their post, RBI stated the following in its response:
1. Court cannot interfere with the economic policies.
The RBI has stated that the Petitioner’s own view on the matter of policy which may be at variance with those of policy makers cannot be a basis of challenge against economic decisions taken by the Government until there is a clear violation of, or non-compliance by the State, of Constitutional or Statutory provisions. The Court indeed has power to strike down a law on the ground of want of authority but it cannot sit in Appeal over the policy of the Parliament in enacting a law and testing correctness of economic policies.
2. Bitcoin is not a ‘Currency’ under the existing laws of India.
The RBI stated that Crypto-currencies fall far short of being a true ‘Currency’ as there is no enabling provision under the existing laws to treat Bitcoin as currency. As per the relevant laws including Indian Coinage Act, 2011, Reserve Bank of India Act, 1934, Foreign Exchange Management Act, 1999 and the Payments and Settlement Systems Act, 2007, the Crypto currencies do not fit in any of the definitions of ‘currency’ or ‘money’ provided under the Indian law. Therefore, the question of RBI declaring them as legal or illegal does not arise.
3. Two committees constituted by the Government to Study Crypto currency.
Government through Ministry of Finance constituted an Inter-Disciplinary Committee (IDC) on 15th March, 2017 which is chaired by Special Secretary (Economic Affairs) with representatives from department of economic affairs, Department of Financial Services, Department of Revenue (CBDT), Ministry of Home affairs, Ministry of Economics and Information Technology, RBI, SEBI, NITI Aayog and State Bank of India to examine the, (1) present Status of Virtual currencies in India; (2) the regulatory approach adopted globally and; (3) to suggest framework for regulation in India. The RBI has given its views to the Committee and now the further course of action is dependent on the decision of the Government and the responsibilities delineated by it to regulatory and enforcement agencies.
But it gets interesting because as we know currently government of India has setup a committee to study implications and issues surrounding cryptocurrencies. Therefore, in such a scenario it cannot decide on behalf of the government to ban banking services on its own.
RBI seems to think it can do anything it wants without disclosing the reasons which has such terrible implications on growth and development of blockchain technology, startups and investment from India.
It's decision is hampering the growth of this sector. It is also leading to flight of several startups and existing companies to other nations. People are also moving to p2p channels for trading as they can bypass the government and restrictive policies of the central bank.
I have my fingers crossed for the 17th May hearing in the Supreme Court for petitions filed there. There is also a hearing on the 24th of May in the Delhi high court for the petitions filed by Coin Recoil and others.
This was an update on the matter and I hope to come back with further details on this. Some exchanges have decided not to get involved in a fight against the government as they are planning to shifting focus towards crypto-crypto trading as well as moving to other markets. Hopefully, these individuals who are fighting for our right to trade cryptocurrencies in India will win for us all.
It's my sincere hope that the Supreme Court will undo the wrong doing by the central bank of the country. It's a pity that our governance relies on bans and chooses to remain ignorant.
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