RBI’s Power Over Crypto Challenged at Length in Indian Supreme Court Today 

 

he Indian supreme court resumed hearing the writ petitions against the banking restriction by the central bank, the Reserve Bank of India (RBI), on Wednesday. Many issues were discussed, ranging from the legality of the RBI action to the classification of crypto assets and how each country regulates them.

Also read: India to Introduce Crypto Bill Next Parliament Session – A Look at Community Responses

Supreme Court Resumes Hearing RBI Case

The Indian supreme court resumed hearing arguments on Wednesday against the banking restriction by the central bank, which it began hearing in-depth last week.
The hearing started with Ashim Sood, counsel for the Internet and Mobile Association of India (IAMAI), explaining to the court why banking support is necessary for businesses that deal in cryptocurrencies, Indian crypto news analysis platform Crypto Kanoon reported from the courtroom. Sood then argued against the legality of the RBI ban, citing the Banking Regulation Act and the RBI Act, emphasizing that the central bank did no research before issuing the ban. He further claimed that the RBI taking action for the sake of general consumer interest is beyond legality. According to Crypto Kanoon, the counsel asserted:

Banning or regulating something must be a legislative act, it is a power which cannot be exercised by way of delegation. A decision to ban or regulate should have come from the legislature instead of RBI.

Sood informed the court that, while the RBI does not see the need to define crypto assets, other countries’ regulators recognize three different kinds, citing a report by the UK’s Financial Conduct Authority, Crypto Kanoon continued to report. The counsel further explained that the RBI itself admitted that it does not have jurisdiction over the legality of cryptocurrency as it is neither a coin nor currency, adding that both the RBI Act and Payment Settlements Act do not apply to crypto assets.

During the hearing, the court asked whether the counsel is concerned solely with bitcoin or with all cryptocurrencies. When the counsel replied all cryptocurrencies in general, the judge said, “we want to understand all, give us in writing about all and how they are different,” Crypto Kanoon conveyed.
Armed with charts and extensive research, the counsel immediately explained the basics of cryptocurrency and distributed ledger technology to the judge, as well as the regulatory frameworks adopted by other countries including all of the G20 nations. New York’s crypto regulation was discussed in depth. The hearing ended with the court scheduling further arguments for Aug. 20.

The Hearing Began Last Week

The crypto case was originally scheduled to be heard by the supreme court on July 23 but was postponed. The court finally heard the case against the RBI ban in depth on Aug. 8, but the hearing of petitions relating to crypto regulation in India has been moved to January next year.

Jaideep Reddy, a lawyer at Nishith Desai Associates representing the IAMAI in its writ petition against the RBI ban, shared what happened in court last week with news.Bitcoin.com. “The counsel Mr. Ashim Sood, briefed by Nishith Desai Associates, started arguments on Thursday with an introduction of the issues and why the circular may not be valid under its parent statutes, including the RBI Act and the Banking Regulation Act,” he detailed, adding:

The judges showed an inclination to hear the issues in detail.

The RBI issued a circular in April last year banning financial institutions from providing services to crypto businesses. The ban went into effect three months later and banks subsequently closed accounts of crypto exchanges, forcing some of them to shut down, including Zebpay, Coindelta, Coinome, Koinex, and Cryptokart.

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