India's Supreme Court Gives Government 4-Week Deadline for Submitting Crypto Regulations

Omar Faridi

India’s Supreme Court has reportedly refused to hold any additional hearings that involve cryptocurrency-related cases.

The Supreme Court of India has also instructed the Union of India to develop and present a cryptocurrency regulatory framework within the next four weeks. This, according to local news outlet Inc42 - which also revealed in its announcement (posted on February 25th) that the Court will “come up” with its own judgement should India’s government fail to provide clear policies and guidelines for firms or individuals dealing in cryptocurrencies.

Court Refuses To Hold Additional Hearings Regarding Cryptos

Justice Rohinton Fali Nariman and Justice Vineet Saran have reportedly been appointed to handle this matter - which has been delayed for several months now as a comprehensive set of crypto regulations were expected to be introduced towards the end of last year. Vijay Pal Dalmia, a senior advocate and one of the earliest petitioners assigned to the case, told Inc42 that the Court has now given an additional and final opportunity to the Union of India to formulate and propose a clear crypto regulatory policy.

India’s Supreme Court has also refused to hold additional hearings for the opposing sides, who had been arguing against the reserve bank’s (RBI) circular (submitted last year). The Indian central bank’s circular had instructed all local banks to stop offering services to those dealing in cryptocurrencies. Although the nation’s Supreme Court supported the RBI’s initial stance against the use of cryptocurrencies, it now appears that regulations governing the responsible use of digital assets will be proposed in the coming weeks.

Commenting on these developments, Nischal Shetty, the founder of CEO of local crypto exchange, WazirX said that this would be the first time that India’s Supreme Court has set a fixed timeline for the government to prepare and submit a set of regulatory guidelines for cryptoassets.

In the past four months, Shetty has been involved in actively campaigning for the development and introduction of a proper set of regulations for digital assets.

Local Crypto Firms Fight Against RBI's Ruling

On April 6, 2018, the RBI had released a circular which stated that all local banks and other regulated financial institutions must refrain from offering services to businesses and individuals involved in crypto-related initiatives. A few weeks later, Kali Digital Eco Systems (an Ahmedabad, India-based crypto startup which manages local crypto exchange CoinRecoil) argued against the RBI’s ban. Representatives from Kali Digital told the High Court in Delhi that RBI’s ruling against cryptocurrencies should not be supported - according to Articles 19 (1) (g) and 14 of the Indian Constitution.

As noted by Inc42:

The Article 14 ‘Equality Before Law’ states that the State shall not deny any person equality before the law or the equal protection of the laws within the territory of India, prohibition of discrimination on grounds of religion, race, caste, sex or place of birth. As per Article 19 (1) (g), all citizens shall have the right to practice any profession or to carry on any occupation, trade or business.

Israel Bitcoin Association Petitions Banks to Reveal Crypto Policy

Neil Dennis

A number of Israel's bitcoin traders have already filed lawsuits against the country's banks and on Monday traders lodged a formal petition demanding that the financial industry explains its cryptoasset policy.

Israel's banks have barred the country's crypto investors from depositing the returns on their bitcoin and other digital currency investments due to the nation's strict laws on money laundering and the financing of terrorism.

In recent months banks have even blocked investors who are known to trade cryptoassets from opening accounts, according to a report by Israeli business journal Globes.

Central Bank Warning

Israel has seen strong growth in digital currency investment in recent years and in 2014 the Bank of Israel, the nation's central bank, issued a warning - in co-operation with the Tax Authority and several regulatory agencies - about the dangers associated with the use of virtual currency, including fraud and money laundering.

Taking aim directly at financial services providers, the statement said:

As the use of virtual currencies enables their anonymous transfer, in many cases evading the need to use financial institutions that are subject  to an anti-money laundering and terror financing prohibition regime, this is an activity with a high risk co-efficient in terms of money laundering and terror financing. Therefore, financial institutions must take this into account within the framework of their risk management policy.

Injunction

Israel's top legal authority is well aware a problem exists. In February 2018, the Supreme Court issued a temporary injunction prohibiting a bank from blocking activities in an account held by a company that engaged in bitcoin trading.

The bank, however, countered the Supreme Court's injunction, citing the 2014 Bank of Israel warning regarding the risks of bitcoin trade. The bank alleged that activities exposing the bank to such unlawful acts might "harm its reputation and public trust in the bank".

While the injunction stood, it did not affect the bank's right to examine individual activities in the account, nor did it affect the bank's ability to take steps to minimize risks associated with the business activities of the company.

Freedom of Information

The freedom of information petition filed in the Jerusalem District Court on Monday by the Israel Bitcoin Association demands that commercial banks make public their policies on cryptoassets.

Jonathan Klinger, legal adviser to the Bitcoin Association, told Globes:

Under the Banking (Licensing) Law, it is the duty of a bank to state to the Bank of Israel the policy under which it refuses to conduct transactions. We therefore contacted the Bank of Israel and asked for this information, but the Bank of Israel did not agree to disclose this policy to us. We therefore decided to petition the court to force the Bank of Israel to provide us with a copy of the policy submitted to it by the banks.

Lawsuits

Last week the Tel Aviv District Court received a petition for approval of a 75 million shekel ($21.3 million) class action suit against Bank Hapoalim that alleges the bank refused a customer seeking to deposit money from the sale of digital currencies.