India’s RBI Says Bitcoin Classification not Currency or Money in Current Legal System
India’s RBI Says Cryptocurrencies Cannot Be Classified Due to its Lack of Compliance to Indian Laws
India’s decision on cryptocurrencies and ICOs have been long awaited, as the country’s central bank, Reserve Bank of India (RBI) gave a deadline of Tuesday, September 11 as their decision-making day. Unfortunately, the RBI failed to keep their word and have yet again postponed the date to Monday, September 17.
RBI’s Point Of View
Since the postponing several Indian crypto investors were not having it with RBI. In particular, their decision to neither recognize Bitcoin as a currency nor money resulted in several outbursts. However, Reserve Bank of India argued that they are not in the position to make the final say. In addition to the lack of power on their side, it seems like Bitcoin doesn’t fit well with multiple laws, namely, the Coinage Act and the RBI Act.
In particular, the Central Bank shared in a document that the “RBI cannot unilaterally decide for the Government on the legality of Bitcoins,” adding that Bitcoin does not match the descriptions of cheques, money and postal orders found in the Foreign Exchange Management Act (FEMA).
Most importantly, Bitcoin’s multipurpose feature allegedly makes it even harder to classify them, as the digital asset can serve as a payment method or an investment option. As per RBI’s documentation,
“Bitcoins and other VCs are not in the physical form and neither expressed or drawn in Indian rupees […] which cannot be made applicable to Bitcoins.”
The RBI also revealed that it could not classify the digital assets as “foreign money” because it is not backed by other countries either. Based on the claims made, the digital assets do not comply by another act dubbed, “The Payment and Settlement System Act (PSSA)”, making the decision even more difficult.
While it is clear that the Reserve Bank of India does not have the necessary authority to come to a final decision as to how cryptocurrencies should be classified, their perspectives do matter. Many investors believe that the central bank has failed to truly understand the specs of the assets and pinpointed it to be the main reason why they have postponed their decisions for a later date.
Given that cryptocurrencies do not match established laws and regulations, wouldn’t it make sense to create a new asset class? What are your thoughts on what the RBI had to share?