Reserve Bank of India coaxes Supreme Court to regulate crypto

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Cryptocurrencies like Bitcoin need to be regulated in India as they “encourage illegal transactions.” That was the argument that the Reserve Bank of India (RBI) made last Friday before the Supreme Court of India (SCI), with RBI senior counsel Shyam Divan saying, “this particular means will encourage illegal transactions and also impact international flow of funds,” the Financial Express reported.

An interdisciplinary committee was set up last year to examine virtual currencies, but the committee has yet to report on the regulatory framework. Subhash Garg, secretary of economic affairs in the finance ministry, appealed for a period of three weeks in order to be able to respond to various petitions seeking cryptocurrency regulations in India.

Meanwhile, Gopal Subramanium, senior advocate representing the Internet and Mobile Associate of India (IAMAI), told the court, “In today’s tech world, transactions are done online and you need banks for that. This issue should concern the government,” noting that the case was a serious matter that should be dealt with at the earliest.

Early this month, the apex court banned banks and financial institutions from providing services to any individual or business dealing in digital currencies within three months and refused to stay the RBI’s April 6 circular.

Gopal Subramanium stated that RBI’s circular, which advocated businesses such as mandated banks, e-wallets, and payment gateway providers to withdraw support for cryptocurrency exchanges, and other business dealing with virtual currencies in India, was “baseless”.

On July 6, all banks and bourses have closed down all operations. The SCI was hearing a transfer petition by RBI as well as a couple of petitions filed by the IAMAI.

Various public interest litigations (PILs) had challenged the RBI circular, which stated that cryptocurrency-related businesses were illegal in India.  These, apart from the one filed by a group of 11 different representatives from various crypto-related businesses, are still pending before the apex court.