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Supreme Court Hears Arguments against RBI’s Banking Restrictions for Cryptocurrencies in India

Honourable Supreme Court earlier today moved Rohan Bhowmick and Siddharth Dalmia’s petitions against Union of India regarding Crypto regulations to January 2020. However, the petition by IAMAI against the RBI’s Banking Restrictions was heard in court today. The next hearing date is August 14, 2019.

Supreme Court of India heard the case of IAMAI against RBI’s Banking restrictions on Thursday, Aug 8. Multiple petitions in the court were clubbed together including the ones filed by Siddharth Dalmia asking the Union of India to completely ban Cryptocurrencies in India, Dwaipayan Bhowmick’s petition asking the government to take action on cryptocurrencies, and finally all the ones filed against the RBI Banking Ban.

The court today adjourned the matters against Union of India to January 2020, as the counsel presented the Draft Bill for banning of cryptocurrencies and informed the bill will be tabled in parliament in the winter session. The counsel of RBI (for IAMAI vs RBI) asked to be adjourned as well, the request was denied and the case was heard after Lunch in the courtroom 5 in front of Justice Rohinton Fali Nariman and Justice Surya Kant.

Arguments from IAMAI in Supreme Court

The internet and mobile association of India created a Blockchain and Cryptocurrency Association in 2018 involving few of the Indian exchanges, some of them are now shut. IAMAI is one of the petitioners who have asked for relief from RBI’s banking ban – a ban on banks and other regulated entities to not support any individual or businesses dealing in Cryptocurrencies.

We got the updates of the argument from Crypto Kanoon, a policy analysis and Crypto Updates platform in India.

Here’s a timeline of the same as tweeted by Crypto Kanoon.

2:18 PM – The court resumed and arguments started on RBI banking ban.

2:27 PM – Provisions of Reserve Bank of India Act and Banking Regulation Act were analysed in order to know whether RBI has power to issue such circular or not.

2:43 PM – RBI circular analysed in the Court.

2:49 PM – Counsel for exchanges Argue:

RBI restricting banks from providing services to Crypto is a colourable exercise of power in the guise of consumer interest.  It can exercise power in public interest only to the extent as provided under law such as interest of depositors, borrowers etc

Colourable Exercise: At times, the courts use the idiom “colourable exercise of power” to denounce an abuse of discretion. Colourable exercise means that under the “colour” or “guise” of power conferred for one purpose, the authority is seeking to achieve something else which it is not authorized to do under the law in question then the action of the authority shall be invalid and illegal.

2:50 PM – The counsel argues that RBI has acted as if the exchanges need to have authorisation to run their business. The truth is that exchanges do not require such authorisation.

2:53 PM – Counsel argues RBI has nothing to do with Crypto:”If Crypto was a commodity then SEBI could have stepped in but RBI has nothing to do with it.”

2:54 PM – Counsel argues: Cryptos are not the means using which laws are violated in fact there are many ways. This way can also be regulated.

2:58 PM – Counsel argues that RBI’s decision has affected multiple businesses: RBI is only a delegatee of power which cannot exercise same powers as parliament which has a direct impact on legitimate businesses.

3:10 PM – Court asked Why cant you work without bank?

Counsel answered Any settlement taking place will be converted into cash. users r owners of bitcoin kept in my wallet, when they wish to sell, they sell their bitcoin through my bank account.

3:14 PM – Court asked show us from your pleadings that any of the company/ business has got shut down due to banking ban effect since this averment is compulsory for making case under article 19(1)g

Counsel showed from page 39 of their writ petition that they have suffered losses and also showed page 199 stating that exchange has lost users due to banking ban.

Note: Multiple exchanges like Zebpay, Coinome, Koinex, Oxybit, KoinOK, Coindelta have shut their exchanges citing operational difficulties due to RBI's restrictions. 

3:18 PM – Court discusses manner in which other countries have treated Cryptos has been discussed. Justice Nariman Asked for a detailed chart on that. We don’t know if it was shared.

Blockchain technology, the underlying tech behind Crypto was explained to the Judges. The counsel also argued that Crypto is not like Rupee or any other sovereign currency. One is a commodity. Other one is a currency.

Brazil’s Supreme Court Judgment on a similar issue was shared with the court.

3:27 PM – Court adjourned to meet again on August 14, 2019.

Many are joyous that the case that has dragged along for over a year, has now finally been heard, albeit not entirely, in Supreme Court. Some have also raised concerns of this being a moot point, given that the Draft bill to ban cryptocurrencies will be tabled in the winter session of the parliament.

Ankitt Gaur, founder of Koinfox, a crypto trading platform and author of the book “Blockchain Unwrapped for Non-Techies” said, “Discussion was really motivating. Basis summary of the arguments, startup ecosystem feel hopeful and look forward to something positive coming out soon.”

What do you think of the Cryptocurrency Vs RBI hearing? let us know in the comments below or join our telegram group to discuss further.

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