New Delhi: Hearing the petition against the Reserve Bank of India’s (RBI) ban on bank dealings with crypto-related business, the Supreme Court of India has upheld the decision of the apex bank. Earlier the Supreme Court of India had ruled that all the crypto-related cases should be clubbed and fixed July 20, 2018 as the date for the hearing but since the ban by RBI would be effective from July 6, 2018 so the apex court accepted the request of the industry body and set July 3, 2018, as the hearing date.
The Supreme Court has thus yet again refused to stay RBI’s April 6 circular, which had directed all banks to extract themselves from existing relationships with crypto exchanges and traders within three months, due to take effect July 6th.
The central bank’s controversial blockade has prompted both public and industry-led petitions, with some appealing to the courts on the grounds that the decision is unconstitutional.
The Internet and Mobile Association of India (IAMAI), which counts as its members several of the crypto exchanges challenging RBI’s stance, requested the early hearing at the Supreme Court. The court had set an initial date of July 20, two weeks after the ban will have taken effect.
At a previous petition hearing on May 17, IAMAI was reportedly requested to submit a representation against the central bank. Nischal Shetty, CEO of crypto exchange WazirX, is quoted by Quartz India saying: “We had submitted a detailed presentation that could have given RBI a clearer picture on what is blockchain, how the exchanges work, etc. But we hadn’t heard back from them yet. In the hearing, RBI has also been directed by the apex court to respond to the representations made by the firms in next seven days.”
A Twitter post from a team of Indian lawyers involved in crypto regulatory analysis confirms that the Supreme Court has today directed RBI “to respond with reasons” to the IAMAI’s representation. The Supreme Court will hear existing petitions at the aforementioned July 20 hearing.
Notwithstanding its hardline stance against decentralized cryptocurrencies, RBI is said to be considering issuing its own central bank digital currency (CBDC).
Some remain optimistic about the country’s future in crypto, with Ripple (XRP)’s global head of infrastructure innovation saying earlier this month that he expects a positive regulatory framework to be forthcoming from RBI in the longer term.
What is Crypto-currency?
The digital currencies in which encryption techniques are used to regulate the generation of units of currency and verify the fund transfers, operating independently of a central bank are known as Crypto-currencies.
If you are an investor in cryptocurrencies, you may soon have problems in exiting positions after July 5. Zebpay, one of the biggest digital crypto-exchanges in India, has already asked its clients to withdraw their funds before the deadline expires.
As per the circular issued by the exchange, it read, “As per a recent RBI action, banks have been told to discontinue banking services to those dealing with virtual currencies. Despite the legal challenge by the industry against RBI’s action, the result is not in our hands. Therefore, people holding funds or depositing funds in Zebpay should continue on understanding the risk as we might not be able to honour the withdrawal requests.”
A couple of cryptocurrency exchanges including BTCXIndia and Ethexindia halted their trading in March amongst fears of a crackdown.