Update 2: Sohail Merchant, founder of Pocketbits exchange have shared a response from RBI they received.
RBI Update: IAMAI received the response from RBI as directed by SC, the response is generic with the same language as the public circulars.
They have not even given deliberate thoughts to the points made by us, all the basis of their arguments is “Investor Protection”.
Update: Today, July 10 is the deadline for RBI to respond to IAMAI’s representation. The RBI has not responded yet. While it doesn’t change anything right now, the silence from RBI can be a positive for IAMAI, Exchanges and everyone who has challenged RBI in Supreme Court. The case is to be heard on July 20.
On July 03, 2018 the apex court of India heard a petition from the mobile body of India – IAMAI. The internet and mobile association of India had asked for a stay order against the Reserve bank’s circular that effectively bans all banks and financial institutions from supporting anyone dealing in cryptocurrency.
Long story short, the Supreme court denied the stay application and upheld the RBI circular. The INR ban comes into effect on July 06, today. The banks must now close accounts of cryptocurrency exchanges, ideally. What we are seeing is that while multiple exchanges have disabled their INR services, some, have announced business as usual. Most notable of the latter being Bitbns exchange and Zebpay on the former list.
The Court order can now be viewed on the Supreme Court’s website. We wanted to dive deep a bit into that.
Supreme Court’s Order
The honourable court did not issue a notice to RBI because “The counsel appeared on behalf of the respondent (RBI)”.
Additionally the order says,
As an interim measure, it is directed that if the petitioner has submitted a representation to the respondent, it shall take steps to dispose of the same within a week hence. Needless to say, the disposal of the representation shall contain reasons.
“As an interim measure, through an Honourable Supreme Court’s order, RBI shall be given a week’s time to respond to any representation made against it in this matter”, said Varun Sethi, a lawyer and RTI activist.
The representation in this case is a detailed document on cryptocurrency, its uses and also how it can be regulated. IAMAI has filed such a representation to the RBI and the later has a week to respond.
“Though apparently it seems that RBI may want to defer its stance, till a communication by Ministry of Finance, Dept of Economic Affairs is issued in this matter, which is expected around mid July as stated by the secretary”, he added.
Sethi’s hypothesis is based on an earlier RTI filed by him in this matter to RBI, which revealed that no research or internal committee was set up to understand crypto currencies by RBI before issuance of ring fencing restriction in April 2018.
The case however is now to be heard on July 20, 2018 along with major other case on Cryptocurrency.
Department of Economic Affairs secretary Subhash Chandra Garg last month told ET Now that a draft for regulations is likely to be wrapped up in the first two weeks of July. His comment, “what part of this business should be banned, what should be reserved and what not”, got the hopes of crypto enthusiasts in the country rising. Maybe something will be banned, but something will be legalised as well.
The Reserve Bank of India announced in the first bi-monthly monetary policy press conference that an inter disciplinary committee was setup to submit a report on the feasibility of a central bank digital currency. As it stands today, no such report has been made public.
There are an estimated 5 million registered users across cryptocurrency exchange platforms in India. The fate of which now hangs in the apex court and within the walls of the Department of Economic affairs. Worldwide media has its eyes set on the country of over a billion people. They must wait a little more.
What do you think the government should do? Let us know in the comments below