If I call myself the Indian cryptogirl, I need to make sure I bring you the latest and most important news from the Indian cryptocurrency ecosystem. I am doing just that.
After speaking to Nischal Shetty, CEO of WazirX exchange, I wanted to find out what’s happening on the battlefield, aka the Supreme Court – exactly as it unfolds. Who better than a lawyer currently representing petitioners in the Crypto matter to satisfy my curiosity?
I had a discussion with Rashmi Deshpande, partner at Khaitan & Co., representing Kali Digital Eco-systems Pvt. Ltd, an Ahmedabad-based cryptocurrency startup that has filed petition against the RBI. Specifically, against RBI’s circular banning banks from dealing with cryptocurrency traders and exchanges.
Before the interview, I asked my followers to share their questions for Rashmi Deshpande, we included most of them.
CCI: As I understand, many petitions (in Supreme Court for Crypto) are now clubbed together, it is no longer a case against the RBI circular but also a request for Supreme Court’s intervention to request the government for regulating cryptocurrency. Fill us in on the details.
Deshpande: “Few individuals had filed petitions seeking regulation of cryptocurrencies in the form of Public Interest Litigation (PILs). A few crypto exchanges (like our client) had filed writ petitions seeking quashing of the RBI circular. Since a common issue regarding regulation of cryptocurrencies is involved, the Supreme Court has clubbed all the matters together. It is hoped that such clubbing will bring about an expeditious resolution of the issue.”
CCI: What are the chances (in approx %) that the court does ban crypto?
Deshpande: “Frankly, it would be impossible to give an approximate % of success of the case. However, we are fairly confident of our position and hope to receive a favourable judgment from the Court.”
CCI: Can we still hope that Supreme Court may rule against RBI to lift the banking ban as regulations for cryptocurrency are still not formed by the government?
Deshpande: “The mere fact that no regulations are framed by the Government may not be ground for a Supreme Court ruling against RBI. This fact may certainly be taken into account by the Court, but it will not be a deciding factor in the case.”
CCI: If goverment comes with a law to ban cryptocurrencty, can that law be challenged in Supreme Court?
Deshpande: “That would depend on the exact nature of the ban and the wordings of the law itself.”
“Court should not interfere in such decisions.”
CCI: What are the major arguments of the RBI for the circular?
Deshpande: “The main thrust of RBI’s arguments is that the matter is a policy decision of the executive arm of the State and that the Court should not interfere in such decisions.”
CCI: What are the major arguments of the petitioners against the RBI circular?
Deshpande: “The major argument against the RBI circular is that it is arbitrary and unreasonable, thereby violative of Article 14 of the Constitution. Further, the circular is restricting the freedom of carrying out business of the petitioners as enshrined under Article 19(1)(g) of the Constitution.”
CCI: Do you think the decisions being taken are in haste or is the court putting in due diligence to study blockchain and cryptocurrencies before coming to a decision?
Deshpande: “So far, the Court has not commented on the merits of the case. As and when the Court takes the decision, we are sure that it will be a well-thought out and articulated decision backed by solid legal as well as technical grounds.”
CCI: Recently in a press release of the 19th FSDS meeting, it said that the Garg Committee is pondering over banning use of private cryptocurrencies? What do you think are ‘private cryptocurrencies’ and what do they mean by “use of”?
Deshpande: “The Government has already made favourable noises with respect to the application of blockchain technology. The Garg Committee’s decisions may be towards discouraging speculation in cryptocurrencies. However, the Government should come up with concrete guidelines in this regard at the earliest. The tentative approach is doing good to no one at present.”
“Cryptocurrencies are a new concept altogether for the average Joe as well as the Government”
Nischal Shetty, co-founder and CEO of WazirX exchange asks: By removing the banking channel, RBI has forced traders to move underground and circumvent the system using P2P exchanges. Are the courts aware that this will further lead to tax evasion, illegal activities? Would it not be better to regulate to ensure greater control?
Deshpande: “Yes, by preventing access to banking channels, cryptocurrency transactions could take place through cash or offshore modes, neither of which will do good to our country. We are trying to highlight this issue vociferously in Court. We hope the Finance Ministry, if not the RBI, takes cognisance of this at the earliest.”
CCI: What do you personally think is the market for Cryptocurrencies in India? Do you think a ban on trade is good for investor protection?
Deshpande: “Cryptocurrencies are a new concept altogether for the average Joe as well as the Government. To protect investors and prevent frauds, the Government may come up with appropriate regulations. In fact, crypto exchanges may be regulated just as stock exchanges are duly regulated by SEBI/Ministry of Corporate Affairs. Once appropriate regulations are in place, sky is the limit for such transactions.”
CCI: The supreme court recently asked for list of countries that have banned crypto. Will that list be available for everyone to check? Why are we comparing and focusing on ban rather than regulation?
Deshpande: “The Court is merely being thorough by examining the approach taken by other countries. We will also be highlighting the fact that several countries have allowed/regulated cryptocurrencies and that even retail businesses such as Starbucks and Subway are accepting cryptocurrencies in some countries.”
Aditya Anand & Ashish Udeshi of Cointract, a start up focussed in the Global Mining Space asks: Can you share your legal opinion on the recent arrests of the Unicoin founders?
Deshpande: “While there are no laws on cryptocurrencies per se, we understand that these individuals have been arrested for flouting norms with respect to “ATM permissions” from the State Government. It could be a case of bad branding.”
CCI: How is the government supporting the notion – Blockchain but not Cryptocurrency? Why are they planning to build an engine without its fuel?
Deshpande: “Government recognises the huge potential of blockchain technology. Currency, i.e. cryptocurrency is merely one of the applications of blockchain technology. The Government is simply apprehensive of having a currency which is outside its control.”
CCI: Anything else you might want to convey to the millions eagerly waiting for the decision? Something to give them assurance or a glimpse of what awaits in the near future?
Deshpande: “Cryptocurrencies are simply revolutionary in terms of their very concept. It is natural that this revolutionary technology is being met with so much resistance at the nascent stage itself. We can nevertheless be hopeful that once the benefits of cryptocurrency are understood and appreciated, it will be a way of life very soon. We, as lawyers, are hopeful that the Court will contribute by rendering a well-thought out and articulate judgment on the subject very soon. This will certainly pave the way for the future of cryptocurrency in India.”
With that positive note, we concluded our discussion. A lot has happened in the Indian crypto-sphere over the past few months, and a lot more is on its way. To make Indian Crypto great again, let’s hope for a positive and well informed decision from our Hon. Supreme Court in the near future.