Looks like, the tide may turn in favour of cryptocurrency exchanges in India soon. The hearing for the Reserve Bank of India (RBI), Internet and Mobile Association of India (IAMAI) and exchanges started an hour back in the Supreme Court.
Ashim Sood, who is representing the IAMAI explained why banking support was necessary. The court asked, “Can’t you change your bank such as those which aint governed by RBI?” In answer to that, the counsel responded that only foreign banks are there and exchanges use that and there would be a problem with the outward remittance which is hit by FEMA regulation.
Case is listed in Court no
4 as item no. 1 today.
Court about to be resumed in few minutes.
After the Court starts, few minutes will go in dealing with "urgent mentioning" matters.
— Crypto Kanoon (@cryptokanoon) August 14, 2019
The counsel further added that the legality of the RBI circular was in question, since there was no study done by the institution, regarding cryptocurrencies. It further said, “Banking regulation Act prescribes the exercise of power by RBI only for the inner working of the Banks and for the interest of the depositors specifically in their capacity as depositors and not otherwise. RBI taking actions for general consumer interest is beyond legality.”
The judgement summarised by the counsel stated, “RBI cant step out of its powers as set out in Banking regulation Act. Therefore its action against private buisinesses in the form of 6th april circular is illegal.”
Sood further argued that the RBI itself had admitted that it does not have the jurisdiction to speak on the legality of Crypto as it is neither coins nor currency and RBI Act and Payment Settlements Act are not applicable on Cryptos. He added that banning or regulating something must be a legislative action and that the directive to do so, should have come under the legislature and not the RBI.
The judge countered that Section 45 J conferred power on the RBI to formulate policies, but the counsel argued that this was especially for Non Banking Financial Company (NBFC) whereas the case pertained only to banks.
The judge said that there is certain speculation involved when an exchange facilitates two people to buy and sell. The counsel for the IAMAI agreed and said it was similar to commodity trade, share market etc. People have consensus on its value. Currently, the judges are being shown how cryptocurrency regulations are being formulated in other countries such as European Union, China, France, Japan, Mexico, United States of America among others.
The counsel ended his arguments by saying that he knows there are detrimental effects to cryptocurrencies, but so does every technology. The hearing ended at this point and will resume on August 20.
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