RBI to Appeal Supreme Court’s Order on Cryptocurrency
- Reserve Bank of India wants to seek review of the top court’s decision to lift the ban on cryptocurrency
- RBI issued a circular in April 2018, barring RBI-regulated entities from performing any transactions involving cryptocurrencies
- The Supreme Court said RBI hasn’t proved that trading cryptocurrencies has damaged its entities
Following the Supreme Court’s decision to lift the central bank’s ban on digital currencies, the Reserve Bank of India (RBI) is planning to file a review petition against the order.
The central bank is worried that the court’s decision to lift the ban could clear the way for trading in cryptocurrencies and jeopardize the country’s banking system.
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A year ago, India’s central bank obliged all financial institutions to cut ties with companies and individuals that operate with digital currencies.
RBI said it banned crypto in order to protect the payment services in the country from the crypto industry. Following the ban, many of the Indian crypto platforms moved to Singapore, however, the Supreme Court’s order may encourage them to come back.
The top court’s order may also enable clients to link their bank accounts with cryptocurrency platforms. The RBI’s ban had prevented financial institutions from conducting any transactions involving crypto.
The Indian government had also voiced its concerns over trading with cryptocurrencies. After the ban, many of the Indian crypto startups shut down their businesses.
The apex court said on Wednesday that the central bank needs to show some examples where its regulated entities have been harmed. Indian citizens are allowed to develop the crypto industry and they have their rights to trade, said the Supreme Court.
“In a way, the verdict upholds the legality of cryptocurrencies and decriminalises the investors who have already invested in various crypto assets like bitcoin, ether, and various others,” said Sidharth Sogani, Chief Executive and founder of Crebaco Global Inc.
“Cryptocurrency exchanges in India can now legally operate for fiat-to-crypto trading pairs as well, in addition to crypto-to-crypto pairs. It remains to be seen how soon the banks will start supporting the exchanges.”
Some of the major Indian banks had frozen accounts of several top cryptocurrency firms following the ban. However, many banks may undo that following the court’s order.
“SC may look at the RBI’s review petition but as of now the cryptocurrency platforms can operate in India,” said Abhishek A Rastogi, partner at Khaitan & Co who had filed a lawsuit for a cryptocurrency platform.