In this opinion piece, Mohammed Danish, a lawyer practicing at the Delhi High Court in India, argues that the Indian central bank’s recent directive to bar banking services to cryptocurrency exchanges is not sustainable by law.
The year 2018 does not seem to bestow a sigh of relief to the crypto community as a new press release by the Reserve Bank of India (RBI) has sparked off a tumultuous reaction which is driving the crypto-hopefuls in a tizzy.
Time and again the RBI has been issuing cautionary to the crypto community about the potential financial, operational, legal, customer protection and security related risks which the community is exposed to while dealing in cryptocurrency but despite operating under the dark clouds of such occasional cautionary by RBI, the sector continued to grow buoyed by the rising prices of cryptocurrencies.
Shedding the haze about the Government’s stance in recognizing the potential of “Blockchain” technology and exploring its use for aiding digital economy, the Hon’ble Finance Minister in his budget speech stated that cryptocurrency is not recognized as a legal tender, thus leaving a baffling ambiguity as to which way the camel will sit on the issue of legality of trading! Many in the crypto community welcomed the mention of “crypto” in the speech and interpreted it to be a subtle nod for endorsing the crypto-trading, whereas others were apprehensive on the fate of the investments if the destiny turns out to be otherwise.
Since the wrath of RBI has fallen now, the crypto community has stuck in another whirlpool of legal haphazard. The press release of RBI acknowledged the potential of Blockchain in improving the efficiency of the financial system, however, it simultaneously pointed out the risks involved with cryptocurrencies such as consumer protection, market integrity and money laundering. The RBI further informed that the entities regulated by it will be precluded from providing services to any individual or business entities dealing with cryptocurrencies. As a consequence of this, crypto investors will not be able to transfer money from their bank accounts to crypto trading wallets like Zebpay, Coinsecure, Unocoin etc.