India’s Supreme Court Calls for Final Hearing on Cryptocurrency Ban
The fate of India’s cryptocurrency market hangs in the balance after the Supreme Court issued a final hearing date on the central bank’s controversial ban prohibiting lenders from serving domestic exchanges and their users. After a short hearing last week, the Supreme Court announced it will deliver its final judgment on Sept. 11.
Crypto to the Supreme Court
The final hearing date was announced mere weeks after the Supreme Court refused to grant interim relief to exchanges affected the Reserve Bank of India’s blanket ban on fiat-to-cryptocurrency transactions. The decision effectively ensured that the RBI’s crippling regulations will be upheld indefinitely despite multiple petitions to get it reversed.
As Hacked previously reported, the RBI initiated the ban in April on grounds that cryptocurrencies threatened financial stability. The edict did not ban cryptocurrencies outright but prevented regulated lenders from servicing domestic cryptocurrency exchanges and their customers. The new measures came into effect earlier this month after exchanges failed to convince the courts for an extension.
According to Quartz, the September hearing involves several parties apart from the RBI, including the central government, the Securities and Exchange Board of India (SEBI), the Enforcement Directorate and the income tax department.
A Change.org petition to get the ban reversed has been signed more more than 44,500 people.
Blanket Ban Unlikely to Continue
Both public and anonymous sources have confirmed that the RBI’s blanket ban on crypto-dealings is unlikely to survive government scrutiny. Hacked reported last month that India’s finance ministry has tasked a sub-committee with evaluating the RBI’s legislation. Under the guidance of the sub-committee, officials are drafting new regulations to present to lawmakers. This was later confirmed by Subash Chandra Garg, a secretary with the Department of Economic Affairs.
Senior government officials, speaking on the condition of anonymity, have also informed Quartz that cryptocurrencies are more likely to be regulated as commodities.
“I don’t think anyone is really thinking of banning [cryptocurrenices] altogether,” one government official said.”The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as a commodity may let us better regulate trade and so that is being considered.”
What’s more, a special counsel of the RBI recently told a bench led by chief justice Dipak Misra that it was necessary to regulate bitcoin and other digital assets to prevent “illegal transactions” from taking place.
The RBI has already admitted to banning crypto-dealings without much evidence or research and the ensuing backlash has forced central bankers to justify their position. For India’s crypto community, there is still hope that softer regulations are coming down the pipeline. In the meantime, market participants have circumnavigated the ban by converting rupees into cryptocurrencies.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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