by Elton Gomes
On Tuesday, the Financial Express reported that the Supreme Court will listen to the final round of petitions against the Reserve Bank of India (RBI) imposing a ban on cryptocurrency dealings. The apex court had set September 11 as the final hearing date. However, the case was adjourned till Wednesday (September 26), though it was highly unlikely that the SC would pass a verdict even on Wednesday. No official report on the verdict has yet been released.
The development is the latest step in a lengthy process after RBI announced the ban in April. After the ban was announced, several appeals were made within the last two months.
In order to get a grip on cryptocurrency, Securities and Exchange Board of India (SEBI) in September sent officials to Japan, the UK, and Switzerland to study cryptocurrency and initial coin offerings from each of the three countries’ financial regulators.
The securities watchdog conducted the excursion to engage with international regulators and to gain a better understanding of foreign crypto mechanisms and systems in order to improve its own process.
On the other side, the RBI also confirmed that it is “keeping a close watch on cryptocurrency.” The apex bank reiterated that it issued a circular that bars banks from providing services to individuals and businesses dealing with crypto services.
RBI bans cryptocurrencies, bars banks from dealing with cryptocurrency traders
In April, the Economic Times reported that the RBI had barred banks and financial institutions from dealing with virtual currencies, including Bitcoins, and said that it was constantly warning users of virtual currencies and the risks associated with it.
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs (virtual currencies),” the RBI said in a statement. “Regulated entities which already provide such services shall exit the relationship within a specified time,” as per the Economic Times.
In July, the RBI released a statement urging all regulated entities, including banks, to halt services to those individuals and businesses who dealt in virtual currencies.
“Virtual Currencies (VCs), also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others… In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs,” the RBI said in a statement, Business Today reported.
RBI releases affidavit on cryptocurrency ban
Later on, the RBI filed an affidavit in the Supreme Court in September. Through the affidavit, the RBI sought to clarifying its stance over cryptocurrencies, and said that bitcoins and its brethren cannot be recognised under the existing legal regime. The apex bank added that virtual currencies are “neither currency nor money; they can’t even be considered as a valid payment system,” as reported by Business Today.
Is it possible to ban bitcoin?
Banning bitcoin, or any other crypto currency, is extremely difficult due to the decentralized nature of the virtual currency. Bitcoin and other crypto currencies that run on Blockchain technology are decentralised. This means they do not run on one server or URL or IP address.
Any individual can own and run multiple nodes on which virtual currencies run. Therefore, the government does not have any central point to attack or block.
Elton Gomes is a staff writer at Qrius