In an unexpected turn of events, the Reserve Bank of India (RBI), which is the central bank of the country, has asked for the regulation of digital currencies in the domestic market at the Supreme Court hearing on Friday. This has come weeks after the court had placed a ban on all alt-coins transactions and banking in the country.
Earlier this year in April, the RBI had sent out a notice that banned all banks and other financial institutions from offering services and transactions in the crypto-market. The circular also advised banks to prevent customers from buying alt-coins using any fiat funds from their accounts.
After a PIL, or public interest litigation asking for the regulation in the crypto-market was filed to the Supreme Court, the RBI exonerated themselves from any responsibilities in creating the laws, stating that it was a legislative issue and required debate in the Indian Parliament rather than a court. Interestingly enough, the central bank later admitted that they had not really conducted any research or consultations regarding the digital currency market before banning financial institutions of the country from proving services to exchanges and businesses dealing with the same.
The Supreme Court has reportedly agreed upon a date in September for a final hearing from the crypto-market petitioning against the RBI banking ban. It has also been made known that the lawyer representing the RBI also highlighted the requirement of regulations in the crypto sector. This marks the first noteworthy instance where the RBI has put the idea of regulation into their policy.
Shyam Divan, special counsel for the RBI, has reportedly explained to the panel headed by Chief Justice Dipak Mishra and Justices AM Khanwilkar and DY Chandrachud that the regulation of all sorts of alt-coins in the country was a necessity in order to prevent their illicit usage. The Indian Attorney General KK Venugopal was also present at last week’s hearing, which indeed reveals the gravity of the petition and the case overall.
After several years of repeated censure from the central bank, their newly softened attitude towards alt-coins has come at the same time as a final draft of regulations made by an inter-governmental committee that was given the responsibility of creating a new policy for the crypto sector in India.
Word is that the authorities in India are trying to mark digital currencies as commodities. This would enable them to regulate the crypto-market exactly like the traditional financial markets.