The Reserve Bank of India – RBI – told the Supreme Court that it must regulate all forms of cryptocurrencies as letting them continue unregulated could encourage “illegal transactions” and impact the “international flow of funds.” RBI is concerned that the use of cryptocurrencies in an unregulated manner makes it difficult to track and thus, has “immense policy dimensions” as articulated by the RBI senior counsel Shyam Divan to the bench led by Chief Justice Dipak Misra.
The Ministry of Finance’s Economic department has created an interdisciplinary committee headed by its secretary, Subhash Garg to examine regulatory framework for Bitcoin and other cryptocurrencies. The goal of implementing such a team is to keenly observe cryptocurrencies and come up with ideas for the types of regulatory structures that can be used to support its decentralized nature. However, it will take another three weeks for Subhash Garg’s committee to “respond to various petitions seeking such regulations in India.”
The matter of cryptocurrency regulation is a critical one and needs to be dealt by the apex court: India’s Supreme Court at the earliest. Gopal Subramanium – a senior counsel – supporting the argument of the petitioners against RBI’s motion, says that this is an urgent matter that should be expedited and concluded as soon as possible. He further argued that recent RBI’s circular that mandated banks, e-wallets, and payment gateway providers to withdraw support for cryptocurrency exchanges and other businesses dealing with virtual currencies in India was “baseless”.
According to Subramanium, cryptocurrencies ban and operations without regulation in today’s high tech digital world affects businesses and is an issue which the government should be involved in.
This is not Reserve Bank of India’s first action against the usage of digital currencies. In April, they released a memo banning “banks and financial institutions from providing services to any individual or business dealing with digital currencies within three months.” Most banks have followed the circular and discontinued their operations with cryptocurrencies platform effecting July 6.
However, all major cryptocurrencies companies came together and filed petitions against such ban. In order to refute RBI’s stance against cryptocurrencies, various Public Interest Litigations – or PILs – have been filed to challenge the Reserve Bank of India’s recent motion of disregarding cryptocurrencies as alleged means of transaction and payment.
The Reserve Bank of India, India’s central bank controls all policies concerning the Indian rupee which is why it might be pertinent to better understand their motivation and decision to want to declare virtual currencies illegal – should it remain unregulated. However, it is of great interest that the Indian public is pushing hard to legalize and integrate such digital currencies into the Indian society.
The Supreme Court has already pushed the date for final hearing on RBI’s motion to regulate or prohibit virtual currency dealings in Indian financial institutions. Previously, the apex court was meant to announce their verdict on July 29, but they have now decided to proceed with the final hearing on September 11. It is also rumored that the government authorities in India are debating whether they should label virtual currencies as commodities – preventing a total ban on cryptocurrencies.
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