India’s Supreme Court permitted banks to manage cryptocurrency transactions from exchanges and traders, reversing India’s central bank (Reserve Bank of India) ban that dealt a significant blow to the booming industry.
The RBI (Reserve Bank of India) order in 2018 has banned trading of all virtual currencies in India.The top court allowed a batch of pleas questioning Reserve Bank of India’s 2018 circular, which barred banks and financial institutions from offering trading services related to virtual currencies, including cryptocurrencies.
India’s virtual currency industry had grind to a halt after the April 2018 notification banning the use of banking networks for cryptocurrency transactions. The refusal to use Indian banks for their operations has crippled exchanges in the country that trade in currencies such as bitcoin, ripple and ethereum, forcing many of them to close it down. In the last two years, most exchanges have moved overseas or closed down their business altogether.
According to Economics times, Wilson Bright, CEO Of Blocksurvey said “When a regulator like RBI bans, the market closes down. Six months back, we pivoted from crypto to blockchain, as we had to sustain. No investor was ready to back us amid the uncertainty of regulations”.
IAMAI is the organization which challenged the RBI order in Supreme Court. Nischal Shetty, Founder & CEO, WazirX and member of the blockchain and cryptocurrency committee (BACC) of IAMAI said “Today’s a historic day for the entire Indian crypto ecosystem. This positive judgement will open doors to massive crypto adoption in India. It proves that we can now innovate, and the entire country can participate in the Blockchain revolution. With over 1 Billion population, the Indian market is a sleeping giant. I’m confident that this judgement will have a positive impact on the global crypto ecosystem.
India only accounted for around 3% of the global cryptocurrency market before the ban, according to estimates by crypto entrepreneur Sathvik Vishwanath. Increasing interest in virtual currencies meant there was “tremendous scope going forward,” Vishwanath, cofounder and CEO of Indian cryptocurrency exchange Unocoin, told CNN two months before the ban.
Moreover, it’s better to be cautious, Cryptocurrency also faces challenges ahead. Last year the government parliamentary committee recommended a ban on all cryptocurrencies. The panel also recommended up to 10-year prison and heavy fines in July 2019 for anyone trading in digital currencies that reveal government negative views on cryptocurrencies.
Naveen Surya, Chairman, Fintech Convergence Council of IAMAI told indianexpress “The matter is still critical as there is a bill to ban virtual currencies in the Parliament and we hope that the government takes appropriate decision to balance between innovation and risk, rather than looking at just one dimension”.
The judgment creates an opportunity for cryptocurrency investors and businesses in India to challenge the stringent laws expected by a skeptical Indian government. Even though the industry should welcome the Supreme Court decision, the fact remains that the issue is not fully at rest, because there is still pending legislative action.
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