On Tuesday, in a reply to Right to Information (RTI) query, Reserve Bank of India (RBI) said there has been no internal committee formed before passing a decree to impose blanket ban on virtual currencies.
The central bank of India has been in the limelight for the past few months (most notably April 5) when it instructed banks to wind up their working relationships with Indian cryptocurrency exchanges.
An RTI enquiry by a Twitter user @Blockchainlaw91 posted the RTI application that they had sent to the RBI as well as the reply the central bank sent includes several pertinent questions such as if there was any committee constituted within RBI that decided and concluded about the risks being associated while trading in virtual currencies, if there was no committee then how was the risk determined, has a committee been established and responsibility entrusted to a specific officer/team of officers to understand the nature, working and usage of virtual currencies worldwide with a possibility of usage in India.
To both these questions the RBI has replied in the negative and referencing its various circulars over the past few years, as justifications for its actions.
In a reply to one of the queries, the bank said, “The RBI was also a member of the Inter Disciplinary Committee constituted by Ministry of Finance, Government of India in March 2017 to examine the present status of Virtual/Digital Currencies in India, regulatory approach adopted globally and to suggest a framework for regulation in India.”
The RBI has also said that it has not done any research before reaching a conclusion on its stance when it released a circular on December 24, 2013 which famously said, “The Reserve Bank of India has today cautioned the users, holders and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.”
In the same circular, it had said, “The Reserve Bank has mentioned that it has been looking at the developments relating to certain electronic records claimed to be “Decentralised Digital Currency” or “Virtual Currency” (VCs), such as, Bitcoins, litecoins, bbqcoins, dogecoins etc., their usage or trading in the country and the various media reports in this regard.”
As we wait for July 20, this RTI throws light on the fact, that neither has the RBI done any prior research in relation to virtual currencies nor has it actually reached out to its counterparts in other countries to understand how this technology works.
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