India ends crypto trading ban
Supreme Court questioned the 'proportionality' of previous measures
India’s Supreme Court has overturned the country ban imposed by the country's central bank on cryptocurrency trading, allowing banks to now handle cryptocurrency transactions from exchanges and traders.
The Reserve Bank of India (RBI) had imposed a ban on cryptocurrency trading in April 2018, telling banks and other financial institutions to desist from facilitating “any service in relation to virtual currencies” such as Bitcoin within three months.
At the time, the RBI said the move was necessary to curb “ring-fencing” of the country’s financial system. It had also said that Bitcoin and other cryptocurrencies cannot be treated as currencies as they are not made of metal or exist in physical form, nor were they stamped by the government.
The ban led to plummeting trading volumes and exchanges shutting down.
In the latest ruling, the three-judge bench said that while the central bank had the power to take pre-emptive action, the Supreme Court questioned the “proportionality” of such measures.
“RBI needs to show at least some semblance of any damage suffered by its regulated entities. But there is none.” the court said.
However, the industry still faces scrutiny as a government panel has recommended a ban on all private cryptocurrencies.
In July, the panel also recommended jail sentences of up to 10 years and heavy fines for anyone dealing in digital currencies.
The Indian government has yet to act on those recommendations or to finalise regulations around cryptocurrencies.
If the government were to follow the panel’s recommendations, it could be the nail in the coffin for digital currencies in India.
FURTHER READING: India crypto ban: Has it happened, and what’s the financial impact?
FURTHER READING: Supreme Court of India postpones its cryptocurrency ban hearing