India’s central bank: Legal system can’t recognize cryptocurrency

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The Reserve Bank of India (RBI) can’t make up its mind on cryptocurrency. In the middle of July, after it had previously ordered banks not to work with any crypto-based organizations, it substantiated that position, claiming that crypto had no value and that they “encourage illegal transactions.” A few days later, it suggested that the Supreme Court of India should regulate the industry to help protect consumers, which implies a certain degree of legitimacy. However, it has now backtracked somewhat, telling the Supreme Court that cryptocurrencies cannot be recognized due to the country’s existing legal framework.

As reported in Business Today, which quoted CNN, RBI told the court that digital currencies are “neither currency nor money; they can’t even be considered as a valid payment system.”

The comments were made during the ongoing trial that has pitted the country’s crypto entities against the banks. Earlier this year, after RBI blocked the entities from dealing with banks, several exchanges decided to sue the central bank, claiming that the move was unconstitutional.

After the ban, the crypto companies approached the Supreme Court and petitioned for a stay against RBI’s decision. The Supreme Court denied their request and told them to work things out with RBI. The crypto industry in India has suffered severely ever since. One crypto exchange, Bengaluru-based Unocoin, has watched as the number of average monthly transactions has dropped from 200,000 to only 20,000.

Following that, India’s crypto community tried to work with RBI to overcome the concerns. However, it has remained steadfastly against the entire industry and doesn’t appear to be considering a change of heart anytime soon.

The decisions made by the RBI are considered by some to be nothing more than power plays. Its objections are easily addressed—as they have been done in numerous other countries already—to help the industry grow. It continues to show a preference for dredging up the same boring excuses as to why crypto shouldn’t be recognized, all of which have already been refuted countless times before.

In spite of the appearance of being opposed to crypto, RBI has secretly been involved in the space. It has formed a division that will research and regulate emerging technologies—including cryptocurrencies.