The Reserve Bank of India (RBI), through senior advocate Shyam Divan, has recently warned the Supreme Court that cryptocurrency regulations are a must, and its absence will encourage the implementation of “illegal transactions” which will have a significant impact on the international money flows.
Divan also highlighted that the current limited regulations on cryptocurrency will have “immense policy dimensions,” which will affect how money flows globally.
Although cryptocurrency by itself is not illegal, there are several cases where people have taken advantage of the market and illegally manipulated their assets to transfer their laundered money across the globe. This startling concern is the driving factor as to why the RBI has been hard on the cryptocurrency market.
Earlier in 2017, a committee was founded by the Indian government, through the Ministry of Finance, to address the issues faced with respect to the status of the country’s cryptocurrency state. Led by Subhash Garg, they sought to formulate a regulatory framework to examine the cryptocurrency dilemma. They require three weeks to respond to multiple petitions concerning such regulations.
RBI had enforced strict actions on cryptocurrency users by ensuring that organizations regulated by RBI would no longer provide services for such users back in April. This was further backed by the Supreme Court in July which put cryptocurrency users to a standstill.
A petition to revert this ban was brought forward. Although it gained more than 44,000 signatures, the decision implemented by RBI stood as it was, and the ban was implemented on July 5. This highlights the potential hazards that the RBI foresees on the cryptocurrency market.
On July 19, the Supreme Court had postponed the hearing on the ban from July 2 to September 11. This has led to a wave of criticism on behalf of the Indian crypto community. In response to this, several Public Interest Litigations (PILs) have challenged the RBI on the policies that it had made.