Author: Jagdish Kumar, India
India’s central bank, Reserve Bank of India (RBI) has accepted that its circular curbing all trading in cryptocurrencies in the country was taken without proper research.
RBI has said in a reply that in order to stop rush of citizens moving towards investing in cryptocurrency, the Research Bank of India has banned trading in crypto’s.
On 6 April 2018 this year, RBI has directed all regulated financial institutions to quit providing services to businesses dealing in cryptocurrencies such as bitcoin, giving banks three months to comply.
After the circular, RBI however formed a committee to study the cryptocurrency for which it said a report will be released by the end of June 2018.
Before announcing the harsh measure on cryptocurrencies in the country, there was no internal committee was formed to investigate the purported risks associated with trading digital coins and no officer or team of experts had been tasked to produce a substantiated decision, the RTI reply said.
After the RBI decision, many crypto currency exchanges operating in the country filed a petition in various courts across the country against the RBI ruling, but the petitions is yet to be heard, as the Supreme Court has decided to hear the plea on 20 July 2018.
Speaking on this, one of the petitioners Coinrecoil’s cofounder, Kunal Barchha said central banks do have authority to ban or restrict commercial banks from a certain industry only when it is declared as completely illegal.
As of today, RBI has not declared Bitcoins or any cryptocurrencies illegal, we have approached the courts for relief, Barchha added.
However, many cryptocurrency exchanges are about to leave the country or shifting their operations in crypto friendly countries, as they have yet not fulfilled the conditions set by RBI in the circular.
To all the questions for the RTI reply, RBI only citied the references of its multiple circulars mentioned on cryptocurrencies issued after December 2013 till April 2018 as justifications for its actions.
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