The Reserve Bank of India’s (RBI) crackdown on cryptocurrencies has received validation from the Supreme Court, as the country’s highest judicial forum refused to relax the restrictions announced by the central bank earlier this year.
In April, the RBI issued a circular which stated that all banks, financial institutions and other entities which come under the RBI’s regulation would not be allowed to “deal with or provide services to any individual or business entities dealing with or settling [cryptocurrencies]” from July 5 onwards.
Following the RBI’s announcement, crypto exchanges and businesses in the country lodged a series of petitions challenging the ban. The Supreme Court decided to conduct a joint hearing of all crypto-related cases on July 20. However, the date was later changed to July 3, after the Internet and Mobile Association of India (IAMAI) requested the court to hear the case before the deadline of the ban.
In the build-up to the hearing, cryptocurrency exchanges in the country remained uneasy – Zebpay, one of the top crypto exchanges in the country, warned customers to withdraw their fiat before the hearing. Their fears were not unfounded, as the hearing conducted today resulted in the Supreme Court upholding the RBI’s ban. However, the three-judge bench, headed by Chief Justice Dipak Misra has agreed to hear the IAMAI’s petition on July 20.
In addition to the IAMAI’s plea, four more petitions against the RBI’s directive are pending in the Supreme Court and the Delhi High Court.
India has yet to clarify its official position on cryptocurrencies. However, views on cryptocurrencies remain largely negative (the RBI has told the Supreme Court that Bitcoin and its peers do not classify as currency) and the Indian finance ministry’s stance on crypto has been far harsher than most other countries such as South Korea and Japan, which are looking to draft frameworks to regulate crypto trading and make it more secure.
At present, things are looking grim for crypto exchanges, companies and traders in India. However, a positive statement on cryptocurrencies from the government, or the upcoming IAMAI hearing could help turn things around.