Following the landmark judgment by India’s Supreme Court to reverse the crypto ban, the Reserve Bank of India (RBI) — the country’s central bank, is seeking to file a review petition.
The RBI’s move to petition the apex court’s ruling stems from the fact that the reversal encourages crypto exchange platforms in the country to resume trading, which poses risks to the traditional banking system.
RBI Not Accepting Crypto Ban Reversal
According to the Economic Times, inside sources say the RBI was planning to challenge the Supreme Court’s reversal of its crypto ban.
As reported by Blockonomi on Wednesday, India’s Supreme Court nullified the RBI’s ban on commercial banks offering services to crypto exchanges in the country. In delivering its judgment on the matter, the Supreme Court described the RBI’s prohibition as unconstitutional.
In response, the central bank is reportedly planning to petition the apex court’s ruling, citing that the decision on March 4 will enable crypto exchange platforms to resume trading, which could be harmful to the banking system.
The RBI’s concern is a well-worn argument, where bitcoin and other virtual currencies are viewed as vehicles for money laundering, and terrorist financing. India’s highest court, in its ruling, stated that the RBI’s arguments failed to prove that bitcoin trading was damaging.
Going by the rules of the Supreme Court, the RBI has to file its review within 30 days of the judgment.
Temporary Reprieve for Crypto Stakeholders in India
Back in 2018, the RBI prohibited all commercial banks from carrying out banking services for businesses dealing in virtual currencies. The blanket ban did not go down well with the crypto community in India, with stakeholders calling the bank’s move “unconstitutional” and “ arbitrary.”
Consequently, most local digital exchange platforms shuttered their businesses and moved to friendlier jurisdictions. Also, a protracted legal battle began between the Internet and Mobile Association of India (IAMAI) and the RBI, with the IAMAI seeing the central bank’s circular as an indiscriminate crackdown of the nascent sector.
Apart from the RBI’s 2018 circular, there were fears and speculations that the country was seeking to ban bitcoin. Several commentators and stakeholders said a bitcoin ban by the Indian government would be a huge mistake.
Furthermore, there were leaked documents stating that individuals who possessed bitcoin and other crypto assets in India could pay a fine or receive a jail term of up to 10 years.
However, the country’s Minister of State of Finance and Corporate Affairs revealed that there were no such laws regarding virtual currencies, and as such, no blanket bitcoin ban in the country.
The RBI also came out to clear the air in January 2020, stating that there was no bitcoin ban and it had no intention of prohibiting crypto ownership. The central bank added that the only ban standing was the directive given to commercial banks concerning crypto businesses.
Indian Crypto Exchanges Quickly Resume Direct Deposits
Meanwhile, with the RBI ban reversed, some crypto exchanges in the country have begun reintroducing direct bank account deposits and withdrawals. Tweeting on Thursday (March 5, 2020) Unocoin announced the resumption of bank deposits on its platform.
Also, WazirX’s founder and Binance’s Indian partner, Nischal Shetty, who championed the #IndiaWantsCrypto movement on Twitter also revealed that the platform was gearing up to resume direct bank deposits. Another local digital currency exchange platform, CoinDCX, reportedly became the first platform to resume crypto trading using bank accounts.
While the Supreme Court’s judgment represents a win for the crypto community, more challenges lie ahead. India’s crypto scene remains largely unregulated with market stakeholders not having a voice in the formulation of government policies that may impact the emerging sector.