The crypto-RBI case is currently underway in the Supreme Court, where the Reserve Bank of India said in the hearing on Wednesday that its 2018 circular, which prevented banks from engaging in crypto transactions, was meant to sustain the integrity of the banking system.
The senior advocate for RBI, Shyam Divan, said that though there’s no formally instituted ban on digital currencies as a law, the Circular was primarily purported to oppose the existence of any other payment systems that counter the country’s current system of banking.
Especially cryptocurrency, the RBI advocate argued that the central bank has consistently caution several businesses and Institutions including banks about the inherent risks in dealing with digital currencies.
For instance, the RBI circular of 2018 came as a conscious policy decision from the regulator so that crypto-related payment systems like Bitcoin, which has gained so much popularity due to its extreme “volatility,” would not undermine the banking system.
The RBI advocate, meanwhile, argued before a three-judge bench led by Justice RF Nariman, in accordance with the petitions filed by digital currency exchanges. Also, Justices V Ramasubramanian and Aniruddha Bose are part of the bench, per the report.
Crypto Exchange Stance on RBI Circular 2018
While RBI claimed that its Circular was imposed to uphold the banking system, crypto exchanges in the country said the ban was beyond its remit.
The Internet and Mobile Association of India (IAMAI), which represented the exchanges at the court, had argued that crypto trading without any prohibiting law is a “legitimate” activity under the Constitution.
However, the central bank denied them the ability to smoothly operate such business through the ban, which prevented them from access to banking channels. According to Advocate Ashim Sood, digital currencies are more like “commodities” rather than currency. Hence, it’s beyond the jurisdiction of the central bank to regulate.
The court hearing will resume today, 23 January 2020, and there are speculations that a judgement in the case might be just around the corner.