The Reserve Bank of India imposed a de facto ban on cryptocurrencies when it prohibited banks from conducting any transactions or dealings involving digital assets and related services in 2018. Photo: The Indian Express

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Cryptocurrencies are banned in India following an official trading halt in April, but the Reserve Bank of India has indicated, via its recently published annual report, it will continue to keep close tabs on them.

The country’s authorities have moved cautiously since the trading ban took effect. A Supreme Court hearing scheduled for September 12 has come and gone without any resolution and India’s not-inconsiderable crypto sector is now waiting to see what happens next.

India-based blockchain lawyer Varun Sethi told Asia Times that the industry remains positive the Indian Supreme Court will make a ruling permitting crypto trades, although it is less likely fiat currency-to-crypto will be allowed.

“All crypto enthusiasts are looking up to the Supreme Court with hopeful eyes. It’s still positive and people are trying different development activities and serving international clients, or setting up companies abroad in countries like Estonia and Malta,” Sethi said.

The RBI’s annual report was clear on the current view toward cryptos. “In India, the government and the Reserve Bank are keeping a close watch on cryptocurrency and have issued pre-emptive cautionary warnings. In early April 2018, the Reserve Bank barred its regulated entities from dealing in or providing services to any individual or business entities dealing with or settling in virtual currencies,” it said.

The report also added several additional warnings: “Developments on this front need to be monitored as some trading may shift from exchanges to peer-to-peer mode, which may also involve increased usage of cash. Possibilities of migration of crypto exchange houses to dark pools/cash and to offshore locations, thus raising concerns on AML/CFT (Anti-Money Laundering and Counter-Financing of Terrorism) and taxation issues, require close watch.”

Sethi has filed a petition for the Securities and Exchange Board of India (SEBI) to disclose what it learned on an international study tour about cryptocurrencies. “To gain more clarity, and to avail information about the tour and what were the observations made, as per applicable law, SEBI has to answer to us within 30 days of the application,” Sethi said. He has not yet had any response.

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