India’s crypto-currency sector is waiting to see the outcome of a hearing that started on Friday in the Supreme Court of India regarding digital currencies in the country.
The move comes following an April decision by the Reserve Bank of India (RBI) to ban dealings between banks and cryptocurrency entities.
“Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies [VCs]. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs,” the bank warned in an April 5 note.
On Friday the Supreme Court resumed hearing a case filed by Indian crypto exchanges against the central bank’s measures and it comes after a July 11 Quartz report said crypto-currencies will no longer be banned in India, but could be treated as commodities.
Subhash Chandra Garg, the Secretary of the Department of Economic Affairs in India, said in a recent interview with TV channel ET that regulatory guidelines were in the works. “We are fairly close to developing a kind of template that we think might be in the best interests of the country,” he said.
However, Indian blockchain-focused lawyer Varun Sethi says the government did no research before banning crypto-currencies. “There was no apparent reason explained by the RBI for this. However, when a litigation was subsequently filed by crypto exchanges in the Supreme Court against the RBI, it stated in its response that the action was taken as a measure of investor protection,” Sethi told Asia Times.
Sethi added that because of the lack of reasoning for a ban, he helped file a “right to information” application. “In that response, they stated that the ban was not backed by any research or recommendation based on any internal committee,” Sethi said.
The lawyer told Asia Times that crypto-currencies continue to be popular in the country. “There is lots of enthusiasm, especially among youngsters. The government shall [now] take more time, to take a decision in this matter. Other than cryptos, there are products being built on blockchain and multiple conferences happening with Andhra Pradesh and Hyderabad states taking the lead in this matter, followed by Bangalore and Gujrat.”
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