India Supreme Courts undecided on the cryptosystem in the country
One of the most prolific technology regions of the world, India, is yet to establish a congenial environment for the next wave of innovation, namely Bitcoin Technology. On Monday, the country’s highest court, the Supreme Court deferred its ruling about cryptocurrency exchanges. The next hearing is scheduled for September 11, 2018, and the court will give its verdict on the use of digital currencies in the country.
Information Technology Dominance
India has ridden the wave of Information technology and come to dominate the world with its customized and differentiated IT services driven by low-cost production and skilled talent pool. In order to ensure that it remains a top player in this spectrum, the country has been very proactive in adopting new technologies as and when such technologies have arrived on its horizon.
However, there has been some degree of resistance to the introduction and establishment of the transactional infrastructure for digital currencies, especially cryptocurrencies.
The sluggish progress in adopting the blockchain technology in digitally literate demography has been frustrating for the end user and investors. However, the government regulatory body and central bank, the Reserve Bank of India (RBI) have sought legal recourse on the establishment and operations of cryptocurrency needed institutions such as exchanges, bourses, and another trading ecosystem.
In April of this year, the RBI had issued directions to close down all crypto exchanges as well as trading activities. It also ordered banks, which are under its preview, to close bank accounts related to cryptocurrencies. The banks ensured they complied with the regulatory bodies deadline of three months to close down their cryptocurrency processes and bank accounts.
The impact of the regulatory backlash was felt by the exchanges. They sought legal relief against RBI’s actions, but the SC in its latest hearing did not provide much relief to the Indian exchanges.
CEO of Indian crypto exchange, BuyUcoin, Shivam Thakral says, “We need to wait for about 50 more days now, and everyday matters as the Indian cryptocurrency ecosystem is getting affected, so we were hoping for a faster decision.”
Before the regulatory crackdown, the exchanges had prolific customer base growth. They added over 100,000 members to their exchanges in a month. However, these numbers have allegedly fallen to just a few thousand in the months after RBI’s directive.
Though RBI is the principal litigant, the government, and the Securities and Exchange Board of India (SEBI) is the Enforcement Directorate as well as the Income Tax department is also party to the case.
There has been public interest litigation as well, in which the cryptocurrency regularisation was sought. The main cause of concern for RBI was the operation of these exchanges in an unregulated ecosystem. The apex body sought to clarify its stance since it was very uncomfortable with the current virtual currencies transactional processes. It also raised questions on the methods and means which should be adopted in order to protect its consumers. It also has issues related to the anonymity of such coin users and the lack of intrinsic value, the central bank has said.