It has been two months since the Central Bank of India announced a blanket ban on regulated entities working with companies or individuals dealing in Crypto assets. The decision sent the Indian Crypto trading community running for shelter. The prices of cryptocurrency in India dipped by over 50% on the day.
In the two months, companies have reached out to the RBI, exchanges and individuals have filed appeals in High court and Supreme Court, petitions have been started and finally many individuals have raised RTIs.
One such individual being Varun Sethi aka @BlockchainLaw91 on Twitter shared a reply to his RTI. As bewildering as it sounds, RBI has answered ‘NO’ to many of his questions, one including, “Did RBI do any research on Virtual Currencies?”
But there is a deeper story. Before that here are some tweets with snippets from the Reply:
— Blockchain Lawyer (@Blockchainlaw91) June 12, 2018
lmao RBI Thug Life 🚬 pic.twitter.com/aistb6U0cT
— Gabru ⚡ (@21Gabru) June 12, 2018
RBI has No Committee, But RBI is part of Committees
On one side RBI denies any committee being setup to understand the usage of virtual currencies, but answers that RBI was member of an inter disciplinary committee setup to examine Virtual Currencies in 2017 by the Finance Ministry.
Perhaps, the answer is that RBI has not setup any committee but is part of committees. Imagine the same answer from a Doctor who has to operate on a patient – I have not setup a team to examine the patient, but I am in the team that examines the patient. Logically correct, but you’d want the Doctor who set up the team to make decisions right?
Why is RBI making a decision when RBI has done no research of its own?
Did RBI consult with Foreign Central Banks
The RTI questions if RBI did really consult with other central banks and their stance of Virtual currencies. RBI denied. That directly implies that the following task from RBI’s press release in 2013 never really took place.
“The Reserve Bank has also stated that it is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations.”
The Information Not Shared
RBI has answered a lot of questions with a reply “What is sought is not defined as information in section 2(f) of RTI Act (2005)”
Questions such as
- How was the Risk determined if there was no committee setup?
- Has RBI ever attempted to understand the technology of Peer-to-peer time stamped, non editable transactions?
- Which Media Reports have RBI taken cognisance from?
- How did RBI reach this conclusion of deciding to terminate offer of all services by entities regulated by RBI ? Please share the minutes of the committee meetings held in this matter which drew such conclusion.
- Was an Expert opinion seeked?
- Will RBI prohibit from Procuring currencies from out of India?
- Is RBI proposing to bring a comprehensive regulatory framework on virtual currencies ever ?
- Will RBI entertain a face to face presentation by the applicant / known subject matter experts on the matter of Blockchain technology and its merits, especially, in the field of financial sector and how the same can be used for public interest along with what model policy framework can be drafted to crackdown on illicit use of this technology?
No Info on Committee Setup to Learn About Blockchain
RBI’s answer to the question “Is there any committee set up for understanding Blockchain technology and its usage by RBI especially in the banking sector ?” was ‘RBI does not have requisite information in this Regard’
No Guidelines for Virtual Currencies under FEMA Act
Many of you must have received a notice from your banks about using credit cards to buy Cryptocurrencies from Foreign Exchanges. When asked what are the “Foreign Exchange Management Act (FEMA) Guidelines pertaining to Virtual Currencies”, the RBI replied
“Virtual Currency is not recognised as currency under section 2(h) of FEMA. Hence no guidelines have been framed on virtual currencies under FEMA”
A Strong Case Against RBI
At the end of the day we have to wait until Supreme court judgement on RBI’s decision about Virtual Currencies. But the RTI application can be used by the lawyers in court to prove that RBI has not gathered adequate data to virtually ban crypto currencies in India.
You can read the full RTI application and response here.