RBI To Challenge Supreme Court Verdict On Cryptocurrency
On March 4 2020, an important piece of news broke out of India. The Supreme Court of India had lifted the banking ban on cryptocurrency exchanges. The news immediately spread throughout the world like wildfire. After all, India is a country of 1.3 billion people. It can serve as an important market for any industry. The Bitcoin industry could grow massively due to India’s participation as well.
That’s why the world was so intent to know about this decision. There was a lot of excitement and cheer. But only a couple of days ago, another piece of news broke out. The country’s central bank, RBI, is planning to appeal the Supreme Court’s decision. Initially, it felt like something bad at happened. But when the expert weighed in, it provided much relief to the space.
The Indian cryptocurrency community had been in a tough spot for two long years. In April 2018, the RBI decided to put a banking ban on the Bitcoin industry there. This meant that any company or individual dealing in crypto would have their bank accounts shut. This put the industry in a weird position. Cryptocurrencies were not legally banned in India. However, a lack of banking access made things very difficult.
Traders didn’t have on-ramps and off-ramps, so it made investments really hard. Exchanges found it difficult to pay their employees in fiat for their salary. Traders couldn’t trade freely due to fear of account closures. The cryptocurrency trading volumes decreased sharply in the country. As a result, many exchanges had to shut down in the country as well. But the few remaining exchanges decided to fight back.
The Internet and Mobile Association of India (IAMAI) filed a writ petition in the country’s Supreme Court. They challenged the RBI’s circular to put into effect the banking ban. Since they were representing the remaining cryptocurrency exchanges, it became a battle between crypto and RBI. The case dragged on for more than 2 years. During this time, there was a lot of fear in the crypto community in India.
However, on March 4, the Supreme Court gave a favourable decision for the crypto community. It quashed the RBI’s circular. It essentially means that cryptocurrency exchanges and individuals alike can have banking access. This immediately got the world’s attention and crypto enthusiasts started celebrating. It was a win for the crypto community and it could finally start growing in the country.
Yet, just a few days after March 4th, reports surfaced that the RBI was planning to appeal against this decision. It sent a mini-panic wave across the crypto community in India. But, when experts made things clear, it provided much relief.
Appealing The Supreme Court’s Decision
According to the law, the RBI has the right to appeal the decision within 30 days of the judgement. It is basically an appeal to officially review the decision. And a “review” is considered as a judicial re-examination of the case. Also, the review, if approved is done by the same bench of judges that gave the decision.
It is also important to note that verbal arguments are not heard in a review. That is unless the Supreme Court specifically asks for the verbal arguments. Perhaps the most important point is that only those judgements warrant review that have obvious errors in them. Meaning that the RBI might be planning to bring to light some kind of error.
Many decisions are appealed in the Supreme Court. They have a long history. However, they are allowed in only rare cases. Most often, they are dismissed outright. It seems like the RBI wants to exercise this right regardless. It will be interesting to see on what grounds they ask for a review.
Can The Appeal Stand?
Most experts in the industry believe that RBI’s appeal for a review won’t get approved. First of all, the counsels on both the side got enough time to argue their cases. The case lasted almost two years and during this time, every facet of cryptocurrencies was discussed. They discussed the technology side, the finance side, the regulations of other countries and more.
The judges got all the information they could ever want. Hence, their decision was based on extensive arguments from both sides. Also, after the arguments were concluded, the Supreme Court took more than 4 weeks to come up with a decision. Their judgement was quite comprehensive too. It was a 180-page long document and explained in detail the whole case.
It is difficult to imagine the judges accepting the review petition after all this. Many experts have gone through the judgment already. There seem to be no “apparent” errors whatsoever in it. That is why RBI’s appeal looks more of a formality than something substantial. After knowing this, most people in the crypto community were relieved again. It meant that most likely the Supreme Court will simply dismiss RBI’s appeal.
Lack of Proof of RBI’s Claims
The RBI obviously didn’t like the judgment. They stand by their outdated views and believe that cryptocurrencies can have a huge negative impact on the financial sector. They say that it can have grave implications for the economy. The RBI has been making similar claims for the longest of times. However, there has been no data suggesting this at all. Even after the RBI conducted its own studies, it found no evidence of this.
Internationally as well, there hasn’t been a significant document that says Bitcoin can dismantle the traditional financial system. Sure, there can be some amount of disruption. But this happens with any new technology and that’s how the world advances forward. The financial industry was long due for disruption as well.
The RBI’s fears, however, are unsubstantiated. Even during the entirety of the case, they provided no proof of their claims. It is clear that their views stem from a place of fear and prejudice. The country’s people can only hope that they change their stance in the face of contradicting data.