The Supreme Court of India has eventually lifted the curb placed by the Reserve Bank of India (RBI) on digital currencies. On March 4, the prime court in the land struck down RBI’s ban on banks providing financial services to crypto related businesses; describing it as illegal.
Moreover, the court verdict was delivered by justices Rohinton Nariman, S Ravindra Bhat, and V Ramasubramanian according to a news report by litigation news site Live Law. The Indian Central Bank (RBI) foisted a ban on the country’s banks from offering financial services to cryptocurrency-related firms. This was back in April 2018 with the rule coming into effect during June of 2018 as well.
The news of the lifted ban was well received by the cryptocurrency community in India. According to the Director Of Technology at Tokenyz Ventures, Samuel Benson:
“It’s a very positive sign that has come through, something that we have been waiting for and expecting for two years now. Most of the infrastructure and bits and pieces towards the cryptocurrency was already built out over the last few years.”
RBI’s Ban Crippled Crypto Industry in India
Following the news by RBI to curb cryptocurrencies back in 2018, the industry was left crippled after showing signs of big progress. The ban led to a very significant drop in cryptocurrency trading in India. Multiple exchanges were forced to shut down the business and some had to relocate to more crypto friendlier nations.
However, following petitions by both industry players and the public, a legal action challenging RBI’s ruling was filed before the Supreme Court. The lawsuit was filed by the Internet and Mobile Association of India (IAMAI) which also represented various exchanges. The association argued that trading digital currencies while there is no law inhibiting it was a ‘legitimate’ business practice according to the constitution. It said that the RBI should not deny such businesses or individual banking services.
Nevertheless, Indian Central Bank in its defense, argued that it has always maintained consistency in opposing; the introduction of other payment systems that undermine the traditional banking system.
A Landmark Ruling for the Indian Cryptocurrency Industry
Well, it might have taken a long time with the Supreme Court postponing hearings and judgment but it has finally dawned. This appears to be a landmark ruling for all the players in the Indian cryptocurrency sector. They can now approach banks for financial services which are very significant in running an exchange firm.
Furthermore, the lawyer arguing against RBI’s controversial ban questioned RBI’s authority in regulating virtual currencies. The RBI responded that it had not generally banned cryptocurrencies in India, but it only imposed banking restrictions on the sector. We all understand banking services are crucial to run cryptocurrency business. A firm has to deal with both fiat and crypto and RBI’s move to deny the industry banking services; it was simply a death sentence to the whole industry.
In the meantime, the government has appointed a panel and tasked it with studying the cryptocurrencies industries generally. The panel has proposed banning all privacy-oriented cryptocurrencies; and even went on to recommend hefty fines and a jail term of up to ten years; for those found guilty of dealing with crypto.
In conclusion, the Israeli Attorney General has submitted a similar case in court; against the ban of banks from providing financial services to cryptocurrency entities. The Attorney General wants money laundry cases to be handled individually, instead of freezing the whole industry.