- The Supreme Court of India has concluded hearings and reserved its judgment on the long and intense battle between the RBI and IAMAI.
- The significant case which will decide the fate of cryptocurrency trading in India began.
The Supreme Court of India has concluded hearings and reserved its judgment on the long and intense battle between the RBI and the Internet and Mobile Association of India (IAMAI) on January 28th, 2020.
The significant case which will decide the fate of cryptocurrency trading in India began. With a Public Interest Litigation (PIL) by the IAMAI against the Reserve Bank of India’s (RBI) ban on banking services from trading in cryptocurrencies.
The court has directed both the counsels to submit their written submission on Friday. However, no date has been set by the court for the pronouncement of judgment.
The RBI issued a directory in April 2017 where it prohibited any entity regulated by the reserve bank from “providing any service to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies”.
The IAMAI not only accused the RBI of acting outside its jurisdiction by placing a banking restriction on the crypto industry but also stated that the RBI had not conducted enough research before issuing the directory.
IAMAI counsel, Ashim Sood said that RBI’s action was against the powers set out for it in the Banking Regulation Act. He further added that its directory against private businesses is illegal.
The IAMAI also stated that the RBI had conducted no prior studies on the effect of virtual currencies on the financial market and had issued the ban only based on “moral grounds.”
The counsel for the IAMAI presented extensive arguments to convince the court that RBI’s 2017 directory was an infringement of a citizen’s rights calling a blanket ban as arbitrary, unfair and unconstitutional.
The IAMAI is a non-profit organization working towards expanding and enhancing the online and mobile value-added services sectors. The RBI in response to the PIL filed a 30-page affidavit with Supreme Court outlining its reasons for the decision. It clarified that it had not prohibited VCs (virtual currencies) in the country.
The ban was only applicable to regulated entities under the RBI, it reiterated. It reasoned that the prohibition was to protect entities from “activities that pose reputational and financial risks along with other legal and operational risks.” The RBI made further arguments regarding the risks of terror financing and money laundering through cryptocurrencies.
The Supreme Court judges expressed interest in understanding the merits of cryptocurrencies and further looked into gibbering regulations in other countries and the FATF.
With the verdict date unknown, crypto traders in India are hoping for the Supreme Court to squash the RBI direct6ory and open the country’s market to virtual currency.