New Delhi, India – A suit that could set a far-reaching Cryptocurrency law precedence is looming in India. The Reserve Bank of India has been served with a court summons for arbitrarily issuing a ban prohibiting its controlled financial institutions from participating in Cryptocurrency deals. The RBI, Goods, and Services Tax Council (GST), and Ministry of Finance officials have been served and are expected to attend a hearing on 24th May or risk being subpoenaed. Coin Recoil, a Blockchain firm affiliated to Kali Digital Ecosystems and based in Ahmedabad, Gujarati-India, filed the petition.
The RBI’s Position
The RBI Deputy Governor, BP Kanungo had issued the ban notice on behalf of the institution on the 6th April. The action was informed by the fact that the RBI was trying to avoid a total collapse of large sectors of the economy in the event of a Cryptocurrency bubble burst.
The RBI skepticism of Cryptocurrencies started following a Rupee demonetization exercise that outlawed 86% of the money in circulation in India in 2016. In this exercise, the government recalled the 500 Rupee note and delegitimized it soon after. This action rendered the Rupee note useless, and many holders were plunged into adverse liquidity situations. As a result, hundreds of millions of Indians lost faith in the Rupee soon afterward.
From 2017 to early 2018, many Indians have shunned the Rupee as a store of value and instead opted for Cryptocurrencies. Additionally, Indians have been giving Indian Cryptocurrencies such as the Unocoin, BtcxIndia, Zebpay, Coinsecure, Bitcoin India, and Koinex, and even the Government-developed Laxmicoin a wide berth for the leading global coins – Bitcoin, Ethereum etc. on grounds of imperfections.
The RBI, concerned by the recurrent fluctuation of the Cryptocurrency prices attributed to volatility had to issue this ban. A knee-jerk reaction, some may say. However, the underlying move was to protect the middle-income Indians from being thrown into abject poverty in the event of a crash with no Rupee savings.
Reading from a Different Script
Industry players read nothing more than bad faith on the RBI part. They are accusing the RBI governing council together with the GST and the government of interfering with the free markets in a Laissez Fair modeled Indian economy. This prohibition is tantamount to quashing down enterprises in India, they are alluding.
On behalf of the petitioner, Mohan Singh, the chief legal officer, read the riot act to the three institutions and indicted them for Violating articles 14 and 19 (1) of the constitution of India. These sections guarantee every citizen of India with the freedom to engage in any trade, which no one can prohibit. In a nutshell, the RBI is alleged to delegitimize free trade, the GST is alleged to have failed to formulate policies that guide Cryptocurrencies, and the government is accused of failing on its oversight role over these institutions.
The Outcome of the Court Process
The dimension that this case will take if it proceeds to a full hearing will leave a landmark on the cryptocurrency markets. Not only has the suit quashed the notion that central bank verdicts on Cryptocurrencies are cast on stone but also given investors the confidence in the fact that the justice system can be a recourse.