The Supreme Court on Tuesday refused to stay the RBI’s directive to banks instructing them to stop all business with entities dealing in cryptocurrencies, which means the ban would come into effect from July 6, as originally planned.
The RBI’s directive and the Supreme Court’s judgment have elicited mixed reactions from industry players and analysts, with some saying this would be a big blow to the industry, while others see some hope in the form of a consolidated cryptocurrency policy.
“The RBI restriction will kick in from July 6, 2018 as envisaged in the circular,” Rashmi Deshpande, Associate Partner, Khaitan & Co. said. “This [the Supreme Court action] is a big blow to not only cryptocurrency trading platforms, but also individuals holding cryptocurrency. The choking of banking channels means that virtually all cryptocurrency related transactions will have to be done in cash or not at all.” In light of the Supreme Court’s action, cryptocurrency exchange Zebpay began warning its customers about an eventuality where it might not be able to honour rupee withdrawal requests.
“While our industry is challenging this legally, the outcome is beyond our control,” the exchange said in a notice. “Hence, if you are holding any rupees, or depositing any rupees in Zebpay, there could soon come a time when we may be not be able to honour withdrawal requests. Please continue only if you understand this risk.”
Some cryptocurrency operators are, however, more optimistic about the situation, citing Economic Affairs Secretary Subhash Garg’s comments about a regulatory framework being set up for the Indian market.
“This is far from the end of crypto markets in India,” said Sandeep Phogat, founder and CEO, Panaesha Capital. “The Economic Affairs Secretary is already quoted saying that a regulatory framework is being built in relation to the cryptocurrency market in India. This framework would not have been in the process of development if the government had the intention to ban cryptocurrencies entirely.”