A three-judge bench in the Supreme Court of India led by Justice Rohinton Nariman yesterday (4 March 2020) revoked the ban imposed by the RBI that restrains banks to permit cryptocurrency related payments of individuals dealing in crypto trading. The ban was imposed back in April 2018. This is evidently good news for crypto traders and investors who kept trading using peer-to-peer networks and crypto exchanges for a couple of years.
RBI came up with recurring warnings to the crypto-traders when the most common and valued cryptocurrency Bitcoin saw a skyrocketing surge in its value i.e. from few cents in 2009 to a massive $14,000 per bitcoin in December 2017. The central bank finally imposed a ban on crypto trading in April 2018 considering it a threat to the financial system of India. As a result, most of the crypto exchanges in India including the leading one Zebpay were shut. Crypto traders and investors remained helpless for the two-year period due to the repeated warnings from the government and the inability to liquidate their crypto assets.
Although the government tried mounting the ‘possession of crypto assets’ as a criminal activity, the proposition was not introduced in the Parliament of India. A big chunk of crypto asset holders to be on a safer side dropped their crypto assets, but there were intelligent ones as well who kept trading via peer-to-peer networks as it was technically legal.
Ajeet Khurana, former head of BACC (Blockchain and Cryptocurrency Committee of the IAMAI), and also the CEO of Zebpay remained indulged in an ongoing fight with the RBI. He also cautioned crypto traders earlier by saying…
“The price of bitcoin has fallen a lot from its December 2017 peak, and this might discourage fresh investors at present. However traders who accounted for the bulk of the volume profit from volatility and are hence likely to come back in bigger numbers. People should note that the government had proposed draconian legislation criminalizing mere possession of cryptocurrency although it was never introduced in Parliament. Such a law could still kill the legitimate crypto market in India,”
Rashmi Deshpande, Indirect Tax Partner at Khaitan & Co., a lawyer who represented one of the crypto exchanges, earlier challenged the RBI for the ban by saying…
“The ruling is a historic one. Based on it, the government will have to revise its proposed legislation on cryptocurrency. This ruling is going to give a much needed boost to the struggling crypto currency platforms and work towards changing India’s image in adopting new age transactions,”
The Apex Court might also consider bringing a financial system for the revival of cryptocurrencies like Bitcoin and others as an asset class.
Now the ban has been lifted, it is still advised by a number of financial planners to the crypto-traders to stay away from the cryptocurrencies until there is more regulatory clarity on holding and trading the cryptocurrencies.