India’s Supreme Court Moves Forward With Cryptocurrency Ban, Banking Services Denied To Crypto Companies

  • The Supreme Court of India now supports the reserve bank’s decision to terminate banking relationships with local cryptocurrency exchanges.
  • Rashmi Deshpande, Indian lawyer representing a local exchange, says “this is a win for the [reserve bank] and a big blow” to crypto-related businesses.

The Supreme Court of India recently announced that it will not be providing any type of relief to cryptocurrency exchanges from the restrictions placed on them by the Reserve Bank of India (RBI). On April 5th, the RBI had ordered all local financial institutions to bring their banking relationships with crypto related businesses to an end within a 3-month time period. The reserve bank’s official ban on cryptocurrency exchanges will reportedly be effective on July 6th, 2018.

In an attempt to fight the central bank’s crypto ban, several digital currency exchanges took the matter to India’s Supreme Court in April. The court then scheduled the next hearing date for July 20th, which is exactly two weeks after the crypto ban was expected to become effective. However, the Internet and Mobile Association of India (IAMAI), which includes local cryptocurrency exchanges among its members, asked the court for an additional hearing on an earlier date, which was conducted on July 3rd.

“A Big Blow” To Crypto Firms

Rashmi Deshpande, a lawyer representing Kali Digital Eco-Systems, a crypto exchange set to launch some time this year, stated, “This a win for the RBI and a big blow to virtual currency exchanges and traders. In our earlier request to the RBI as well, we had asked it to extend the deadline by a month after the July 20 hearing.” Deshpande added that since it has now been decided to move forward with the ban, crypto traders and businesses will not be able to access the nation’s banking services.

In a previous May 17th hearing conducted by the apex court, the exchanges had been requested to file their issues and complaints against the RBI. The companies operating the exchanges had also notably been in close communication with the central bank during the last few days of May and early June. Nischal Shetty, the CEO of local crypto exchange WazirX, noted that his company had tried to explain to the RBI how blockchain technology works by submitting “a detailed presentation that could have given [the bank] a clearer picture on what is blockchain, [and] how the exchanges work.” However, Shetty says he never got any response from the RBI.

Cryptocurrency Regulations Draft Almost Finalized

Moreover, during the July 3rd hearing, the supreme court ordered the reserve bank to address the issues raised by the crypto companies within a week from the end of the hearing. At present, the Indian government is reportedly almost ready to submit its first draft on proposed cryptocurrency regulations.

Subhash Chandra Garg, India’s Economic Affairs Secretary, said that the drafted regulations specify “which parts of [these crypto] businesses should be banned and what should be preserved.” He also stated that discussions pertaining to the drafted regulations would take place and be brought to an end by “the first fortnight of July.”

Reserve Bank of India to Appeal Supreme Court’s Lift of Crypto Banking Ban

The Reserve Bank of India (RBI), India’s central bank, is reportedly set to appear the Supreme Court’s decision that lifted the banking ban it imposed on cryptocurrency businesses.

According to a report published by the Economic Times citing “people with knowledge of the matter,” the RBI revealed it’s concerned the ruling could see cryptocurrency trading in India grow and put the country’s banking system at risk.

As CryptoGlobe reported, the Reserve Bank of India barred banks from servicing cryptocurrency-related businesses in April 2018, prompting various petitions to overturn the move. These petitions led to a case pitting the RBI against the Internet and Mobile Association of India (IAMAI) that was heard by a three-judge bench, and ended up in a ruling against the central bank’s ban, calling it unconstitutional.

On social media, Indian cryptocurrency users reacted the RBI’s plans to appear the Supreme Court’s decision with skepticism.

The RBI’s concerns that the ban being lifted could see cryptocurrency trading grow may come too late, as shortly after the Supreme Court’s ruling exchanges throughout India started opening fiat deposits for their users.

Abhishek Rastogi, partner at Khaitan & Co., who submitted a case in the Deli High Court that was later on transferred to the Supreme Court, told the news outlet that:

The Supreme Court may look at the RBI’s review petition but as of now the cryptocurrency platforms can operate in India. Many companies have even gone bankrupt after the RBI’s diktat and they may also look to initiate action in this regard.

For example Zebpay, a cryptocurrency exchange that shut down after the ban and recently reopened, has already announced on social media users who go through know-your-customer (KYC) checks can deposit Indian rupees. The exchange adds that due the interest it’s been receiving, customers may even face delays.

Featured image via Pixabay.