The Reserve Bank of India has decided to continue its battle against cryptocurrencies by issuing an affidavit in the Supreme Court. The Banking Regulator has clarified its views on cryptocurrencies by clearly stating that Bitcoins and Altcoins cannot be recognized under the existing legal administration. Additionally, the RBI also stated that the virtual currencies are not real currencies and cannot be used as a mode of payment.
Currently, the Supreme Court has scheduled the next hearing for September 17.
Earlier this year, the RBI directed all banks to stop dealing with individuals and businesses associated with virtual currencies by July 5. Before this ban, around December 2013, the RBI issued four warnings against Bitcoin and other cryptocurrencies. This decision was made because many companies were dealing in digital currencies, which the RBI believed to have no value. After the RBI initiated the ban, many exchanges moved to court. Things got serious when Delhi High Court issued a notice to the RBI after a petition was filed by Kali Digital Ecosystems, which planned to launch its own exchange, Coin Recoil.
Quartz had challenged RBI based on two grounds: Under Article 19(1) of the Indian Constitution which gives every individual the right to take up or carry on with any occupation, trade or business, and Article 14, which prohibits discrimination and mandates equal protection under the law for all. The ban was a big blow to the exchanges who lost almost half of their traders because of the ban. For example, Unocoin, a Bangalore based exchange, saw a downfall from 200,000 to 20000 traders.
Following the rules, the exchanges sent detailed representations to the RBI trying to convince them why the ban should be lifted. The exchanges added their will to be regulated. But the RBI remained immovable. The bank also listed out its concerns about cryptocurrencies to the Internet and Mobile Association Of India (IAMAI), which counts bitcoin exchanges as its members. RBI flagged off concerns on the grounds of investor protection, money laundering, and terror financing because of the anonymity of such transactions and lack of intrinsic value.
The affidavit doesn’t give a soft hand to digital currencies anywhere.
