On March 4, India’s crypto community rejoiced as India’s Supreme Court ruled that the Reserve Bank of India’s (RBI) ban was “disproportionate and unconstitutional.
A pending bill may still inhibit cryptocurrencies from flourishing in India, with India’s parliament yet to rule on the «Banning of Cryptocurrency and Regulation of Official Digital Currency Bill» from 2019, Business Insider reported on March 7.
If passed, the bill will introduce unique regulatory frameworks for virtual currencies, utility tokens, and commodity-backed tokens – likely creating a complex exclusionary legislative apparatus for blockchain businesses to navigate.
Supreme Court repeals Reserve Bank of India’s crypto ban
The circular had prevented financial institutions from providing banking services to companies operating with cryptocurrency. The ban had been in place since April 2018, and targeted companies offering “any service in relation to virtual currencies.”
Less than 24 hours after the restrictions were repealed, several Indian cryptocurrency exchanges had already resumed fiat deposit services – including Unocoin, Wazirx and CoinDCX.
In response to the repeal, HashCash consultants also announced it would invest $10 million into India’s crypto industry this year.
India’s crypto industry not in the clear yet
In addition to the hostile bill from 2019, India’s crypto community will have to also overcome an appeal from RBI in the Supreme Court regarding the repeal of its circular.
Citing anonymous sources, The Economic Times reported on March 6 that RBI is concerned that widespread virtual currencies could put India’s banking system at risk.
Sohail Merchant, a member of the Internet and Mobile Association of India’s Blockchain and Cryptocurrency Committee, stated that despite hostility from lawmakers toward crypto, the main objective of the Indian blockchain industry stakeholders is “to create a dialogue with policymakers and develop a comprehensive framework for crypto assets in India paving the way for innovation.”
Crypto ban drives Indians to the dark web
Despite the RBI ban on cryptocurrencies, a recent study by Statista reveals that India’s population has the highest per-capita usage of darknet platforms worldwide.
The report shows that 26% of 23,227 respondents between the ages of 16 and 65 have used technologies that facilitate access to the dark web – more than twice the global average of 12%.
India Supreme Court Lifts RBI Ban on Banks Servicing Crypto Firms
The Supreme Court of India has struck down the Reserve Bank of India’s (RBI) controversial ban on banks’ dealings with crypto-related firms.
The court’s bench of Justices Rohinton Nariman, S Ravindra Bhat, and V Ramasubramanian, delivered the judgment earlier today, March 4, litigation news site Live Law reported.
Landmark ruling
India’s central bank, RBI, had imposed a blanket ban on banks’ dealings with crypto businesses back in April 2018, which came into effect in July of that year.
Following both public and industry-led petitions, a case combining challenges against the central bank was brought before the Supreme Court by the Internet Mobile Association of India (IAMAI). Hearings for the challenge were held over two weeks in January of this year.
IAMAI is a not-for-profit industry body whose mandate is to appeal to governments on behalf of internet industry consumers, shareholders and investors. Members include Yahoo! India, Apple, eBay, Unocoin and Etsy.
Live Law reports that the justices ruled that the RBI’s action was “disproportionate.” Key arguments in the case included the central bank’s contention that cryptocurrency is a digital means of payment and that the institution was “empowered by law” in its intervention.
This was countered by IAMAI counsel Ashim Sood, who argued they can oscillate between serving as a commodity or store of value and as a medium of exchange. Sood argued that RBI did not have the jurisdiction to ban financial firms from providing services to cryptocurrency-related businesses.
The future of crypto in India
With the court delivering its verdict on the landmark RBI case, the legal and regulatory climate for cryptocurrencies in India now appears to face one last hurdle. In fall 2019, the Indian government opted to delay the introduction of a draft bill on a potential cryptocurrency ban to parliament in the 2019 winter session.
The bill – entitled “Banning of Cryptocurrency Regulation of Official Digital Currencies” – reportedly aimed not only to impose a complete ban on the use of crypto in India but also to establish the foundations for a state-backed “Digital Rupee” issued by the Reserve Bank of India.
