Courting Cryptocurrency: Indian Supreme Court quashes ban on cryptocurrency
April 8, 2020
2 min read
What's going on here?
In what has been deemed as a “historic day” for crypto trading in India, The Supreme Court of India quashed an order by the Reserve Bank that disallowed trading in cryptocurrency on 4 March 2020.
What does this mean?
In 2018, the Reserve Bank of India (RBI), India’s Central Bank, banned crypto traders from accessing formal banking channels. The top court in the country has referred to the ban on crypto trading as “disproportionate”. RBI’s decision forced crypto exchanges to relocate to other countries, change their business model, and in some cases, shut down completely. The Central Bank’s circular was challenged by the industry as well as the public, and the combined case was finally brought to The Supreme Court by the Internet & Mobile Association of India (IAMAI). This Association includes members such as Yahoo, Apple, and eBay.
What's the big picture effect?
The RBI’s key argument was that cryptocurrency is a digital means of payment, and therefore, it was “empowered by law” to intervene. The IAMAI argued that cryptocurrencies can serve as a commodity (store of value) and as a medium of exchange, and therefore the RBI lacked the jurisdiction to ban such services.
Although a lot more needs to be done on a policy level, this decision will have a knock-on effect on the crypto market. This is a boost for financial inclusion in India, a country with around 1.2 billion mobile subscribers and over 580 million bank accounts. This decision means that these currencies can now be effectively regulated under a much-awaited comprehensive regime.
Meanwhile, in South Korea, there is a new Bill that provides a framework for regulating crypto trading. People could already trade in cryptocurrencies with over 30 exchanges prior to the Bill, but with the new rules introduced in the Bill, the number of accredited exchanges is set to fall to 5-7.
In the West, these developments are being closely followed, especially in the United States. The Crypto-Currency Bill of 2020 was recently introduced in order to create a Federal Digital Asset Regulator. Although, with the current COVID-19 emergency, this is unlikely to go ahead in the near future.
The decision of the Indian Supreme Court is surely a step in the right direction towards a more recognised and regulated crypto ecosystem. With simultaneous developments in India, South Korea, and the wider global economy, the recognition and regulation of cryptocurrencies is definitely on the global agenda.
Report written by Maya Sajeev
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