A little over a month ago, Reserve Bank of India ordered the banning of cryptocurrency operations throughout the country. The surprise decision triggered an immense amount of negative reactions, especially considering that India is one of the continent’s primary markets for cryptos.
The Reserve Bank of India (RBI) also mentioned that it was creating a working group to study the feasibility of issuing a state-backed cryptocurrency.
On June 12, a Twitter user under the pseudonym “Blockchain Lawyer” made public some responses issued by The Reserve Bank of India (RBI) to a Right to Information enquiry.
They show that the work done by the institution was not the most objective, which is why it is very likely that appeals by users and exchange bureaus against these decisions will be satisfactory:
The official document shows that the decisions taken lacked the minimum prior work to support them:
[Question:] Was there any committee constituted within RBI that decided and concluded abut the risks being associated while trading in virtual currencies?”
Another important aspect is that the RBI did not carry out the research work required for a measure with the potential to affect such a big number of people:
[Question:] Has RBI done its own research before reaching conclusion on its stance … on virtual currencies…?
It was also demonstrated that the RBI did not seek external advice to apply what is known as “comparative law.”
[Question:] Has RBI send out communication to other counterpart Central Banks outside India, in relation to virtual currencies to understand the regulatory framework, if any, they are building in their country to enable RBI to understand if similar regulatory frameworks can be built in India as well..?
Furthermore, the Reserve Bank of India does not have exact knowledge of the entities that would be under its regulation:
[Question:] What are the list of entities that are being regulated by RBI?
[RBI:] There is no such list being maintained
Regarding the official use of cryptos, the RBI maintains that they do not have the necessary regulatory framework for their use and legal acceptance. This is the same reason why India did not agree to trade with Venezuela using its Petro cryptocurrency:
[Question:] What are the Foreign Exchange managmente act guidelines pertaining to virtual currencies?
[RBI:] Virtual currency is not recognized as currency under Section 2(h) of Foreign Exchange Managment Act (FEMA) Hence, no guidelines have been framed on virtul currencies under FEMA