SC cancels RBI order, paves the way for cryptocurrency trading
NEW DELHI: The Supreme Court on Wednesday overturned the 2018 circular ban of RBI and financial institutions to provide services to any individual or commercial entity that operates in virtual currency, saying it was a disproportionate measure taken by the regulator.
The verdict would allow companies in the sector to use the banking platform to trade and carry out transactions in cryptocurrencies. The central bank had claimed that allowing cryptocurrency (bitcoins) compromised the integrity of the banking system.
A bank of judges R F Nariman, and said that while RBI had a special role in the economy and was empowered to make such decisions, it must pass the proportionality test to be valid. He said there was no evidence that the banking and financial sectors suffered damage due to the exchange and circulation of virtual currency. The SC noted that the ban on the participation of banking channels had paralyzed trade and exchange in virtual currency, although cryptocurrency had not been banned as such.
I will have to go through the superior court order and then we will probably meet with all of you to see what we want to do or how we see the ruling, said the finance minister.
Trade Daily trade in the Indian crypto market averaged Rs 150 million in 2018 ’
When the consistent position of RBI is that they have not banned virtual currencies and when the Government of India cannot answer a call despite the fact that several committees present several proposals, including two bills, which advocated for exactly opposite positions, no it is possible for us to argue that the contested measure is proportional, ”he said while writing the 180-page verdict.
The position of the date is that the VCs are not prohibited, but the exchange of VCs and the operation of the exchanges of VCs are sent to comatosos by the contested circular disconnecting their lifeline, that is, the interface with the regular banking sector . The worst thing is that this has been done (i) despite the fact that RBI found nothing wrong with the way these exchanges work and (ii) despite the fact that VCs are not prohibited, ”said the ruling.
The crypto asset industry is estimated to have a market capitalization of approximately $ 430 billion worldwide. It is estimated that India contributes between 2 and 10% according to varied estimates. According to the petitioners who contested the RBI circular, the total number of investors in the Indian crypto market was approximately 20 lakh and the daily commercial volume averaged Rs 150 million in 2018.
The bank, however, said RBI has the power to establish a mechanism to regulate the venture capital sector and rejected the claim that the role and power of the regulator can only come into play if something has acquired the status of a legal tender