Since April this year, the cryptocurrency space in India has been unstable after the Reserve Bank of India (RBI) issued a directive to all local banks and financial institutions to break all ties with firms associated with digital currencies. It has now emerged that the RBI acted blindly when issuing the ban on crypto.
When issuing the ban in April, the RBI made it clear that,
“It has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time. A circular in this regard is being issued separately”
On learning about the ban, cryptocurrency exchanges in India moved to court to protest the ban. They also sought for the ban to be lifted as they await the final verdict from the supreme court.
The case at the supreme court has been taking longer than expected with the hearing date being pushed forward every time it is due.
But through Varum Sethi, a blockchain lawyer, who had applied for a Right To Information (RTI) in April, it has now been revealed that the RBI acted blindly when issuing the ban on crypto.
In response to the RTI, Varum noted that,
“It seems as if the ban was arbitrary and it came into effect without any thought from the RBI. It has either answered in the negative or given conflicting answers to our questions asking what led to this ban”
In the RTI, the Reserve Bank of India indicated that it did not establish a committee which would have helped “understand the nature, working, and usage of virtual currencies worldwide with a possibility of usage in India”
Additionally, the RBI declined to provide further information as requested by Sethi indicating that ‘what is sought is not information as defined in section 2(f) of the RTI Act 2005’
Some of the parties who went to court have been insisting that the ban was ‘completely superficial’ since it was not backed by any research or consultations with other central banks outside India.
Some countries like China have completely banned digital currencies while others, even though they are unhappy with virtual money, have resorted to regulations.
Now that the RBI has admitted it acted blindly when issuing the ban on crypto, do you think the supreme court in India will lift the ban and call for regulations?
Let us know your thoughts in the comments section below.