Media reports in India around Cryptocurrencies like Bitcoin, Ethereum or even proposed projects like Facebook’s Libra are often very poorly written. I say that because as someone who has dedicated over 2 years to the subject, knows a thing or two about it.
Statements like “RBI has banned Cryptocurrencies”, “Bitcoin is banned in India”, “the government has officially banned Cryptocurrencies”, seem to be thrown around loosely without any research.
I am writing this letter to all the editors of media channels, big or small, conglomerate or independent, digital or print, so that you are truly aware of the real legal situation of Bitcoin and other Crypto assets in this country.
Is Bitcoin or any Cryptocurrency Banned in India?
The answer is NO. There is no if, there is no but, there are no conditions, Bitcoin and other cryptocurrencies can be bought, sold, mined or held freely as of right now, and legally.
Proof shall be given in further questions.
Has RBI Banned Bitcoin or Cryptocurrencies in India?
NO. RBI has not banned Bitcoin or Cryptocurrencies in India.
Has RBI Banned Trading of Cryptocurrencies in India?
NO. RBI has not banned trading of Cryptocurrencies in India.
So what has RBI done for Cryptocurrencies?
On April 05, 2018, while announcing the bi-monthly Monetary policy, RBI said, they want the regulated entities, like Banks, NBFCs, wallets, Credit cards, etc to stop dealing with businesses or individuals who deal in Cryptocurrencies. RBI decided to “Ring-fence regulated entities from virtual currencies“
RBI Banned the banks from providing services to Cryptocurrency businesses and individuals who want to use Cryptocurrencies.
On April 06, 2018 RBI released a circular RBI/2017-18/154 about Prohibition on dealing with virtual currencies, giving banks and other entities three months to end existing relationships with anyone. The title was misleading, but media houses should read the content before reporting.
So RBI still banned Banks, and without banks you cannot exchange Crypto, so RBI banned Bitcoin, right?
NO. See, RBI asked banks to stop dealing with individuals and businesses in cryptocurrencies. But, individuals are free to trade cryptocurrencies in a Peer to Peer manner. There is a risk of banks finding out and closing their accounts, but it is not a legal risk. No one will go to jail for it.
Peer to peer trading is when one individual wanting to buy crypto assets and another wanting to sell crypto assets, do that mutually by making the necessary fund transfers. If you want to learn more about Peer to peer trading, we have extensive resources on our website.
RBI has several times, in Supreme Court, submitted that RBI has no authority to Ban Cryptocurrencies. Here’s a brief of one submission:
RBI has also in its annual report acknowledged the Peer-to-peer trading of Cryptocurrencies and confirmed they are monitoring it, not banning it, monitoring it.
If that is not all, the head of inter-ministerial committee tasked with finding suitable ways to regulate cryptocurrencies Subhash Chandra Garg , said on National TV that anyone can trade and exchange cryptocurrencies using Cash.
Why is there the news of Cryptocurrency Ban in India?
In 2017, the government set up an inter ministerial committee headed by DEA secretary Subhash Chandra Garg to prepare a report on Virtual currencies and how it can be regulated.
The committee took its time and dwindled from its promises of releasing the report several times, but ultimately they released the report on July 22, 2019. In the report, they recommended a complete ban on Cryptocurrencies.
Along with the report, they also published a Draft bill titled “Banning of Cryptocurrencies and regulation of Official Digital Currencies bill 2019”.
The draft bill details on the proposed ban on Crypto, how it can be implemented, what the punishment will be like, etc.
You can read the Report and draft bill on the DEA site.
The Government hasn’t Banned Crypto yet, but it is proposing to and RBI has not banned Crypto because it says it has no authority to, and hence Bitcoin and Crypto trading is legal in India?
Yes that is perfect.
Then what is happening in Supreme Court?
Oh good question.
See in November 2017, two different petitions were filed in Supreme Court for Cryptocurrencies. One from Siddharth Dalmia asking for a complete ban, another one from Rohan Dwaipayan Bhowmick asking the government to make a policy for Bitcoin and Cryptocurrencies.
Then after RBI released its diktat, crypto-exchanges, business owners, individuals, all filed petitions in Supreme Court to get a stay on RBI’s circular. The most high profile petition was filed by the IAMAI, the Internet and Mobile association of India.
However, Supreme Court rejected the interim relief request and asked for the case to go into trial. Since May 2018, the case was getting postponed until August 2019. Where for four days, the case heard in Supreme Court, and now the latest date for hearing is November 19.
In August 2019, the court also set the date of hearing for Matters filed by Dalmia and Bhowmick to November 20, 2019.
This is the brief version. For a detailed version of what went down in court, you can follow these links:
Read: Supreme Court Hearing summary from August 08, 2019 Supreme Court Hearing summary from August 14, 2019 Supreme Court Hearing summary from August 20, 2019 Supreme Court Hearing summary from August 21, 2019
What Happens Now?
Well, now the government may amend the Draft bill or not, and present it into the parliament in the winter session. (Nov 2019 Update: The bill is not going to be put in parliament in the winter session)
Meanwhile, the banks are still not providing services to Crypto exchanges, or crypto businesses, threatening to shut down accounts, the media channels like yours are not showing the reality to the broader audience.
We are a small community of Crypto enthusiasts, each one with their jobs, aspirations, ideas and businesses trying to get the government to listen to us. But Media houses do not tell the true story, not always. And that makes everyone in our family fear for us.
Our parents are now warning us that we will go to jail for trading Cryptocurrencies, for holding bitcoin. But we will not. Not right now. Because there is no ban on Crypto. Media agencies like PTI and ANI, need to be cautious about what they send in their wire feeds. Most people don’t even know how news circulate via these wire feeds.
So, it is a request to every journalist, reporter, editor out there, to do their research, follow the links on this post, before they post a news article or make a video on Cryptocurrencies in India. It will be a big help!
If you’re reading this, I request you to share this article with everyone you know. Let them know the truth of Cryptocurrencies in India.