India Upholds Bank Ban on Crypto Bourse
India has retained the prohibition imposed by its central bank on transactions between cryptocurrency exchanges and regulated financial companies.
The Indian Supreme Court ruled the ban of Reserve Bank of India (RBI) on servicing crypto enterprises will remain in place. The country’s highest court asserted its backing on a circular promulgated by the central bank in April, which states that Indian financial institutions would not be allowed to undertake any transaction with crypto exchange or firms. They were given three months to ditch their dealings with such crypto entities that will begin from the ban’s imposition on July 6.
“It has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [cryptocurrencies]. Regulated entities which already provide such services shall exit the relationship within a specified time,” the RBI had said in a statement.
“We cannot comment on the times ahead but there is no need to panic, RBI has just reiterated what they have already implemented, THERE IS NO BAN ON BITCOIN in India as of yet, there is no official stand of the government on this,” the exchange said. “This is just the Central Bank of India taking a stand against a technology which they are going to implement themselves in terms of a Digital Rupee,” PocketBits had posted on its Twitter account.
The recent development has spurred crypto industry players to question the legality of the country’s policy shift. Still, the high court had ordered all courts under its jurisdiction from accepting any petitions challenging the central bank’s recent move although it earlier announced the high court would deliberate on the issue on July 20. This, after five similar petitions were filed against the RBI.
“One of the key arguments made out in the petition was that the circular was not preceded by any stakeholder consultation, which is what the latest order gets to,” Anirudh Rastogi, a managing partner at the law firm, said at that time.
Previous reports had said the hearing was scheduled 17 days earlier upon the request of Internet and Mobile Association of India (IAMAI) members. But the July 20 hearing is still set to occur, reports added.
In an earlier court proceeding, the Indian central bank had argued that digital coins such as bitcoin and ethereum cannot be classified as currency in the country since the existing laws require coins to be created using metal and to have a stamp by the government.
Previously, the RBI announced a creation of a group studying the likelihood of issuing its own virtual currencies.
“Rapid changes in the landscape of the payments industry along with factors such as [the] emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies,” the RBI had stated.
“While many central banks are still engaged in the debate, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency,” it said at that time.