The Supreme Court refused to stay a circular released by RBI which prohibited banks and financial institutions from dealing in bitcoin and other cryptocurrencies. The next hearing for the matter will be held on July 20.
The crypto exchanges have explained to the RBI how cryptocurrencies are being adopted by other jurisdictions and how concerns related to the digital currency can be dealt with. It is noteworthy that in its judgment, SC has asked the RBI to consider arguments made by crypto exchanges in the matter.
Cryptocurrencies have not been banned from India yet, although Finance Minister Arun Jaitley had said in his budget speech for 2018-19 that virtual currencies are not legal tender.
What is the next step?
A committee was set up in December 2017 to discuss and recommend regulations for virtual currencies, headed by Subhash Chandra Garg, secretary, department of economic affairs of the Ministry of Finance. Many crypto exchanges and stakeholders in the business are waiting on the outcome of deliberations of the committee.
Some alternate ways to keep the business going have sprung up. Many exchanges working in India plan to change their model and become crypto-to-crypto trading exchanges rather than the present crypto-to-currency trading. Some are trying to keep the crypto-to-rupee transactions afloat.
Experts are advising investors and other stakeholders to liquidate their assets while there is still time.
Ashish Singhal, founder CEO of CoinSwitch, an aggregator of crypto exchanges, told Mint, “We do not know how long it will take for the regulations to firm up. If someone believes in the underlying technology of crypto and the long-term potential, they can stay invested. We feel like many other countries, India will also bring in regulations eventually.”
After RBI released its circular banning use of cryptocurrencies by financial institutions in the country, trading between the virtual currencies had already started gaining pace. Many Indian crypto exchanges like Zebpay and Koinex were reportedly offering crypto-to-crypto trading.