The landmark judgment (Internet and Mobile Associations of India Vs Reserve Bank of India) by the honourable Supreme Court of India came as a big relief to cryptocurrency exchanges and traders, where it quashed the RBI’s notices banning banks and customers dealing with the virtual cryptocurrencies, it’s time to retrospect the actions and inactions of judiciaries, legislators and regulators and find the roadmap to the future.
What Made Supreme Court to Deliver This Historic Judgement
Taking cognizance of Article 19(1)(g) of the constitution that grants freedom to its citizens to practice any profession, or to carry on any occupation, trade, or business, the court says the restrictions imposed by RBI is an attack on the article and its citizens, and it quashed all such notices.
However, the court maintained that the RBI has the right to regulate a banking business through reasonable restrictions imposed under a law made in the interests of the general public, rather than putting a blanket ban on it. Section 35A of Banking Regulation Act, 1949 empowers RBI to issue directions to banking companies (i) in the public interest (ii) in the interest of banking policy (iii) to prevent the affairs of the banking company from being conducted in a manner prejudicial to the interests of the depositors or of the banking company itself and (iv) to secure the proper management of the banking company.
Impact of the Judgement
Following the judgment, the cryptocurrency trading business gained its momentum. The existing traders and investors both thanked the court for its historic judgment. The development transitioned India into the capital of cryptocurrency trading. Many new crypto trading platforms have evolved in the country, and investors have a healthy sentiment.
The current legal status of cryptocurrency in India
Currently, there is no legal backing to cryptocurrency trade, nor is there any obstacle from the law regarding its operation.
In the recent past, the new bill tabled in the lower house on January 29, 2021, of the parliament to ban private cryptocurrencies and provide a framework for the creation of an official digital currency during the current budget session of parliament, has once again made cryptocurrency trading and legalities talk of the town.
Why is banning cryptocurrency in India not a rational take?
IAMAI estimates that banning cryptocurrency will cause a loss in investments and hit 10 million Indian crypto customers. The daily cryptocurrency trading stands in the range of USD350 million – USD500 million. There are over 300 startups in India that either serves as trading exchanges or provide support to the business indirectly.
It’s not just the trading that matters. The underlying technology of cryptocurrency is bolstering the success of FinTech companies in India. The country is home to approximately 2174 such startups that are holding a stack in processes like payment, lending, wealth tech, personal finance management, and much more.
Institutions and investors favoring cryptocurrencies in India are leaving no stone unturned to ask for legalization of the trade, not a ban. The Internet and Mobile Association has urged the same to the government and cited the growing interest of people.
Citing the public and business interest, it seems that the government has softened its take on cryptocurrency. In a recent press conference, Finance Minister Nirmala Sitharaman has also agreed upon the fact that a complete ban is not on the card.
The finance ministry is pursuing the matter with the Reserve Bank of India and key stakeholders of the business and tech firms to explore new opportunities using cryptocurrencies and underlying wonder technologies and make trading risk-free, legitimate and safe.
The only concern for the government is to devise a proper instrument to block its misuse as a money-laundering tool or a system to fund terrorism, and that thought holds its ground.