The Reserve Bank of India had issued a circular in April 2018, which imposed a banking ban on crypto service providers. The circular prohibited banks from offering their service to all crypto-related service operators in the country. The banking ban was then challenged by the Internet and Mobile Association of India (IAMAI) in the supreme court whose hearing has been going on for over a year now.
In the latest hearing which began on the 14th of January, the judges asked both the counsels to start the arguments fresh and from the beginning. The three-day proceedings saw the prosecution side explaining to the bench judges that the banking ban imposed by RBI was not under their jurisdictions.
The prosecution was headed by Mr Ashim Sood who noted that the RBI circular was bad mainly for three reasons,
- Malice in law. RBI doesn't have the power to ban but acted to ban Crypto on effect.
- Colourable exercise
- Ultra Vires – without authority.
Mr. Sood also pointed out the flawed analysis by RBI which in its circular claimed that since crypto assets are volatile and risky, it should not be allowed to be regulated. Sood explained that the same risk is involved in stock trading also and effectively lies under the domain of Security and Exchange Board of India (SEBI).
Mr. Sood also clarified that nobody wants to make cryptocurrency as a legal tender which has been a strong defence against legalizing cryptocurrencies. Mr. Sood explained that these digital assets can be used as a medium of exchange and store of value. He explained,
“Some people would find value in it and some people would exchange it. It is a technology which should be given free play. Casino chips are useful to the people who are inside the casino […] When I come out of [a] casino, its use ceases to exist but then some people may exchange it and it holds a value for the interested people. So likewise there is no obligation to use VCs [virtual currencies] as a medium of exchange.”
The current court proceedings in the RBI vs IAMAI is being seen as one of the most fruitful proceedings in the case which has been going on for over a year now. However, given the state of Indian judiciary it won’t be a big surprise if the case takes longer than what many had anticipated.