The Supreme Court Overturns Reserve Bank of India’s Cryptocurrency Ban.
A legal battle between a consortium of crypto exchanges and the Reserve Bank of India (RBI) that has persisted for the last two years, finally came to a close yesterday with the Supreme Court ruling in favour of petitions put forward by the consortium. As a result Asia’s third largest economy, home to over 1.3bn people will now be able to innovate with greater freedom and engage more with the rapidly growing market of cryptocurrencies and the benefits they bring to finance.
The 180 page judgement published, outlined the infringing rules imposed by the RBI back in April of 2018 that effectively banned financial institutions from dealing in, or providing banking services to crypto exchanges:
“The RBI issued a “Statement on Developmental and Regulatory Policies” … paragraph 13 of which directed the entities regulated by RBI (i) not to deal with or provide services to any individual or business entities dealing with or settling virtual currencies and (ii) to exit the relationship, if they already have one, with such individuals/ business entities, dealing with or settling virtual currencies.”
Despite the ban being overturned, the courts found that the RBI had not acted unconstitutionally as the Circular was set aside on the grounds of proportionality, a principal of ‘criminal law used to convey the idea that the severity of the punishment of an offender should fit the seriousness of the crime.’ While then the battle may be won, the war is not yet over. Tanvi Ratna, CEO and founder of Policy 4.0, which works on crypto policymaking in India said in a statement:
“What is logical to conclude is that if the verdict goes against the actions of the central bank, there might be re-thinking on the issue within our financial policymakers. There is no guarantee this will happen, though, especially if the verdict only address the question of regulatory overreach of the RBI, and leaves sufficient leeway for policymakers to decide upon the treatment of cryptocurrencies,”
In the meantime, those involved are celebrating the victory over the RBI. Nischal Shetty, the CEO and founder of Wazirx, a leading Crypto exchange in India was elated, writing on twitter:
“Crypto has won in India. We won! #IndiaWantsCrypto”
Furthermore Sumit Gupta, CEO and founder of CoinDCX, an exchange aggregator shared his thoughts being involved in the case optimisticly writing:
“The uplifting of the ban by Supreme Court is going to open new opportunities for India in terms of investments, economy and a market as a whole,” … “As few of the surviving petitioners of the case, we are thankful to the Supreme Court for hearing our side of the story. We have always seen crypto as a potential to unlock India’s dream of becoming a $5 trillion economy.”