Bitcoin prices may be down but there is some wonderful development in India. Like China, cryptocurrency trading is illegal in the country thanks in part to the heavy handedness of the Reserve Bank of India (RBI). But things are about to change. It has been reported that the Indian Government has been given four weeks to draft clear cryptocurrency regulations by the Supreme Court before the court make rulings on pending crypto related cases. If not, sources reveal, the court will make their independent ruling and perhaps reverse the current ban instituted by the RBI.
The RBI Crypto Ban
In April 2018, the RBI in a circular (DBR.No.BP.BC.104 /08.13.102/2017-18) ordered all banks under its control to cease offering services to customers and businesses dealing with cryptocurrencies.
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.”
However, in the past, the RBI admitted that they had instituted the ban without due diligence. Even so and despite engagement with crypto exchanges and other businesses, the bank did not bulge on their stand. After July 25, 2018, all banks ceased from supporting fiat deposits and withdrawals forcing exchanges to issue warning statements.
In a statement, Zebpay said they “were unable to fathom all the consequences of the bank account shutting [down] and hence would not guarantee that we will continue the crypto-INR trade pairs forever.” Zebpay has since shut down in India because of banking problems.
Internet and Mobile Association of India (IAMAI) Petition
In response to this consequential ban, several petitions were filled with the objective of lifting the ban. Amongst the many, the one filled by the Internet and Mobile Association of India (IAMAI) whose members include the country’s leading exchanges like Zebpay, UnoCoin and Wazirx, has been drawing a lot of media attention. Wazirx did launch a crypto peer to peer service utilizing escrow accounts and by-passing the smothering RBI ban. In Jul 2018, Founder and CEO of Wazirx, Nischal Shetty said:
“If banks stop providing services after July 6th then we’ll need to launch P2P. All eyes are on banks now to see what they will do. Do they wait for the July 20th hearing or do they go ahead and implement the ban on transactions from July 6th onwards?”
The association continue to hold that businesses are suffering because of RBI’s unconstitutional restrictions. It has been reported that the cryptocurrency recommendation from the task force set up by the Ministry of Finance have been finalized but it is unlikely that findings will be relayed to be public in days the near future as the task force is proceeding with “utmost caution”.