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Indian Supreme Court grills RBI for cryptocurrency banking ban

“supreme-court-650-400_650x400_71461841002” by BMN Network is licensed under CC BY 2.0 at https://www.flickr.com/photos/[email protected]/36004822620

Thu, 22 Aug 2019, 04:01 am UTC

India’s Supreme Court has criticized the country’s central bank and ordered it to respond to complaints on the ban of banking services to crypto-related businesses.

The news came following the latest session of several hearings on Aug. 21, detailing the action taken by the Reserve Bank of India (RBI). The court ruled that bank officials had not properly responded to complaints forwarded by the crypto industry.

It can be recalled that the RBI prohibited banks from conducting any businesses with crypto operators last July 2018. The move has made it challenging for crypto businesses to function efficiently in the country. In fact, several exchanges have shut down because of the lack of support services.

However, this decision was slammed by Indian Supreme Court Justice Rohinton Fali Nariman, according to Crypto Kanoon, a crypto advocacy group in India that attended the hearing.

Now [J]ustice Nariman questions RBI why you have not properly responded to the representation. You just said that we are forwarding to Govt. Angrily says this is not an answer,” Crypto Kanoon tweeted, after Nariman was reportedly not satisfied with the answers provided by the RBI.

In addition, Ashim Sood, the representative of the Internet and Mobile Association of India (IAMAI), discussed how other countries are establishing a new legal framework to accommodate assets like bitcoin. He argued that instead of taking hints from these nations, the RBI took an unpleasant stance and imposed the ban.

RBI recognized that development in the crypto industry need[s] to be monitored as after banking ban there is risk of shit to dark web, tax evasion, AML [anti-money laundering], CFT [countering financing terrorism] violations. So when the RBI has knowledge about its effect then why not to put it under the framework so as to make it compliant,” Sood argued.

Shyam Diwan, RBI’s legal representative, failed to provide a valid response and maintained that “Crypto has some monetary characteristics, and people’s consensus drives its value. If more and more people continue to adopt them as a means of payment, then it might compromise our monetary system badly. It also has the ability to [conduct] cross border transactions. That is where the problem lies.

Nariman deferred the case for 2 weeks to give RBI time to respond in an appropriate manner, which the central bank has agreed to. The court is set to “rehear the arguments on 25th September, on the reply/reconsideration to be given by RBI to the exchanges’ representatives.”

Discussing the result of the hearing, Crypto Kanoon summarized that “Case takes the most [unpredictable] turn. Justice Nariman directs that RBI must respond to the representation in the manner appropriate. Offers to defer the case for 2 weeks as part heard, let the answer come on reconsideration of banking ban by RBI. RBI has agreed.”

As previously reported, the Supreme Court of India has divided the crypto case into two. The ongoing IAMAI versus RBI started earlier this month. Meanwhile, the crypto versus RBI case has been heard and adjourned until January 2020 to give the government time to deliberate the draft bill during the upcoming winter session.

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