In response to a legal case brought by the Internet and Mobile Association of India (IAMAI), the Reserve Bank of India (RBI) has clarified that Bitcoin is not prohibited in the country. The nation's central bank says it has only restricted regulated financial institutions from dealing with anyone using digital assets.
The IAMAI, which also consists of cryptocurrency exchanges, filed a petition against a 2018 RBI directive. The central bank was deemed to have prohibited any use, purchase, or trading involving digital assets.
The petition eventually turned into a full-scale legal case that recently had a Supreme Court hearing. The Association indicates that the decision of the nation's central bank was illegal. He argued that crypto trading is a legitimate business activity as there is no actual law prohibiting it.
[amazon box="8423429717"]The Reserve Bank Of India takes precautions
According to a recent local report , the RBI has responded with a 30-page affidavit. It clarifies that the bank has never banned cryptocurrencies altogether; only "isolated" regulated companies should deal with them.
“Firstly, the RBI has not banned VCs (virtual currencies) in the country. The RBI has directed the entities regulated by it not to provide services to those persons or entities that operate or clear VCs. The RBI has been able to identify the entities regulated by it, so that they do not engage in activities that pose reputational and financial risks along with other legal and operational risks.”
RBI in 2018: does not deal with cryptocurrencies
India has no shortage of history when it comes to Bitcoin and altcoins. The IAMAI legal case arose as a reaction to the aforementioned RBI directive in 2018. This directive stated that banks and other regulated financial institutions must cease doing business with any individual or company using digital assets. According to bank officials, trading cryptocurrencies creates an undesirable risk.
“Virtual currencies (VC), also referred to as cryptocurrencies and cryptoassets, raise concerns regarding consumer protection, market integrity and anti-money laundering, among others. In view of the associated risks, it has been decided, with immediate effect, that entities regulated by RBI shall not deal with or provide services to any individual or business entity dealing in or establishing VC.”
In any event, RBI's decision had dire consequences as several exchanges were closed as a result. Crypto exchanges have been fighting to attack the RBI's move to cut their banking services, effectively forcing companies that trade digital assets to close or relocate out of the country. The parties will return to court on Tuesday.
